Our Car Payment Is $2,400 A Month And We're Under Water

Summary

Podcast Summary: The Ramsey Show Highlights – "Our Car Payment Is $2,400 A Month And We're Under Water" Release Date: June 24, 2025
Host: Ramsey Network featuring Dave Ramsey, George Kamel, and other experts

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Introduction to the Financial Struggle

In this episode, a caller named Dustin reaches out to The Ramsey Show seeking advice on crippling car payments. Dustin and his wife are burdened with two substantial car loans, each amounting to $55,000. The monthly payments are staggering, with the Tesla alone costing them $1,600, leading to total car payments of $2,400.

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Underwater Car Loans

Dustin explains the predicament:

"One is a Tesla, one's a truck. We owe 55,000 on the Tesla. 55,000 on the truck. Payment is 800. The Tesla payment is 1600." (00:06)

Dave Ramsey quickly assesses the situation:

"My guess is you're underwater by like $30,000 on this Tesla word." (00:35)

Being "underwater" means Dustin owes more on the car than it's currently worth. Dave emphasizes the severity of the situation, especially concerning the Tesla, advising Dustin to evaluate the car's actual market value versus the loan amount.

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Current Financial Situation

Dustin provides further details:

"We bought it when the value of the car was high and the interest rates were low." (00:30)

Despite purchasing the vehicles under seemingly favorable conditions, the rapid depreciation of the Tesla has left them in a precarious financial state.

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Asset Valuation and Debt Overview

Dustin updates on the current worth:

"The Tesla I could get at high of. could get like 27,000… sale between like 30 and 35,000." (00:47–01:07)

For the truck:

"Truck is fairly new. 20, 23, and it is worth like private value, probably 42, 45." (01:13)

Beyond the car loans, Dustin and his wife face additional debts:

• Credit Cards: Remaining balance of $19,000
• Second Mortgage: $156,000 on a house they no longer own, with monthly payments of $1,800
• Primary Mortgage: $800,000 monthly payment

Despite a combined income of $40,000 to $45,000 per month, their expenses have spiraled out of control.

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Monthly Debt Obligations

Dustin elaborates on their financial obligations:

"Every month there's a debt. We try to at least get enough saved up to put pay off one." (02:21)

Their commitment to private Christian schooling for three children costs them $3,000 monthly, adding to their financial strain.

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Budgeting and Spending Concerns

George Kamel intervenes to highlight a critical oversight:

"You're very concerned with the month to month payment. And I think that... you're never looking at the big picture amount." (03:12)

George points out that despite a substantial income, Dustin and his wife lack a comprehensive budget, leading to unchecked spending and accumulating debt. He emphasizes the importance of viewing expenses in their entirety rather than in isolated parts.

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Strategies for Debt Reduction

Dave Ramsey offers a strategic approach:

"It would be to basically pause your debt snowball for a month or two and stack up 30, 40 grand in cash to get out from these underwater cars to sell them and buy some beater cars in the meantime." (06:07)

This involves saving aggressively to pay off the underwater car loans, thereby eliminating the immediate financial burden and freeing up monthly cash flow.

George Kamel suggests leveraging existing assets:

"You could probably look at those and sell them and take some of the money and pay off this debt and simplify your life." (06:36)

Additionally, he recommends:

"You need an every dollar budget. You need to do that tonight with your wife." (07:50)

Creating a detailed budget is crucial for tracking and controlling expenses, ensuring that every dollar is allocated effectively towards debt repayment and essential needs.

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Behavioral Factors and Savings

Dustin shares their savings approach:

"Most of our savings we've been saving has just been going towards tackling the debt and erasing." (05:55)

However, they've only retained $4,000 in savings after paying off some credit card debt. This limited cushion underscores the urgency to halt further debt accumulation and focus on building a robust financial foundation.

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Final Recommendations and Action Steps

Dave Ramsey and George Kamel converge on actionable steps:

1. Immediate Budgeting: Implement an "every dollar" budget to gain full visibility of monthly expenses and identify areas for reduction.
2. Asset Liquidation: Sell the underwater Tesla to eliminate negative equity and reduce monthly car payments.
3. Expense Cutting: Reevaluate discretionary spending, potentially scaling back on private schooling or other non-essential expenses.
4. Debt Snowball Continuation: After addressing the car loans, resume the debt snowball method to systematically eliminate remaining debts.

Dave Ramsey concludes with a rallying message:

"We're rooting for you, Dustin. It's gonna be a journey, but you'll clean it up fast if you do this stuff." (08:13)

He encourages listeners in similar situations to take decisive action, emphasizing that a structured approach to budgeting and debt repayment can lead to financial recovery.

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Conclusion

This episode of The Ramsey Show Highlights sheds light on the complexities of managing substantial debts despite a high income. Through Dustin's case, listeners gain insights into the importance of comprehensive budgeting, the dangers of underwater loans, and the necessity of addressing both immediate and long-term financial obligations. The hosts provide practical strategies and motivational support, reinforcing the show's commitment to guiding individuals toward financial stability and prosperity.

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For more financial advice and strategies, listeners are encouraged to follow The Ramsey Network and utilize tools like the EveryDollar budgeting app.

Transcript

[Dave Ramsey]

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

[Dustin]

So my wife and I, we have a question about these two. These two car payments we have every month. One is a. One's a Tesla, one's a truck. We owe 55,000 on the Tesla. 55,000 on the truck. Payment is 800. The Tesla payment is 1600.

[George]

Oh, gosh.

[Dave Ramsey]

How was that possible?

[Dustin]

I don't know. We bought it when the value of the car was high and the interest rates were low.

[Dave Ramsey]

My guess is you're Underwater by like $30,000 on this Tesla word. Yeah, and I say that as a Tesla driver, so. Oh, my goodness.

[Dustin]

Yeah.

[Dave Ramsey]

Okay. What are these cars currently worth? Have you looked into that?

[Dustin]

The Tesla I could get at high of. Could get like 27,000. I got a dealer would get me for it.

[George]

Oh, my God.

[Dave Ramsey]

What about like private party value? Because dealers are going to take you to the cleaners with their markup.

[Dustin]

I've seen, I'm seeing them for sale between like 30 and 35,000.

[Dave Ramsey]

Okay, let's have some hope here and say 35 and you owe 55. What about the truck?

[Dustin]

Truck is fairly new. 20, 23, and it is worth like private value, probably 42, 45.

[George]

Okay, so that's a little better.

[Dave Ramsey]

Okay, so let's say you're underwater by 30 grams, minimum. Wow. What do you guys make?

[Dustin]

Together? We make. We make anywhere from like 40 to 45,000amonth.

[Dave Ramsey]

Amazing.

[George]

Okay. Okay. Thank God. If you had said a year, I was about to come through the microphone into your phone and get you.

[Dustin]

Like to be honest, we just, we, we just have a lot of expenses every month and we're finding you have just kind of got out of control here. We had three credit cards. We were in debt. We, we paid the two off. We have one more left for at 19,000. Our kids go to private school. Three kids in private school. Christian private school.

[George]

Is that a tuition that you pay or is there debt around it?

[Dustin]

Every month there's a debt. We try to at least get enough saved up to put pay off one. Keep that like monthly. Monthly debt a little bit lower. We have a second mortgage on a house that we don't even own anymore that we've sold that we're still paying on. How much is that it a month? It is 1800.

[George]

What's the whole.

[Dustin]

On our mortgage on a. Yeah, yeah. Well, the whole amount is 56,000. Okay, I'm sorry, 100. I'm sorry, 156,000.

[Dave Ramsey]

56,000.

[George]

Okay, so there's the two, the two cars we talked about. 19,000 in credit cards, 156,000 and a second mortgage on a house that you don't even have anymore. What, what's your current mortgage? Just curious.

[Dustin]

8,000.

[George]

No. What's the full amount?

[Dustin]

Oh, 800,000.

[George]

Okay. So I want to call out what I'm hearing, which is really common, Jeff, that. I'm sorry, Dustin, I'm looking at the, I'm looking at the wrong screen. I'm sorry, I don't have my glasses on. The, the thing I want to call out that I'm hearing is you're very concerned with the month to month payment. And I think that when you are doing very well like you are, it's very easy to go. It's very easy to go. I can afford the payment. I make 45000 bucks a month. I can afford the payment. I can afford the payment. And you're never looking at the, the big picture amount. And therefore, yeah, it does start to accumulate really quickly. So you've kind of got to turn your whole thinking around and go what the heck does the thing cost? How much is it? Is it 55 000? And I think when you start looking at it like that, even with this great income that you have, it'll cause you to make different decisions.

[Dustin]

Yeah.

[Dave Ramsey]

So how are you guys going to get out of debt if you're continually going into it at this point? Hey, sorry for the interruption. This is important. No one likes to think about dying but one day your family will have to deal with everything you leave behind. So the question is, will it be easy or a total nightmare? That's where Knockbox comes in. Knockbox is a kit with 15 categories and clear instructions. They that give your family an organized plan so they're not sifting through old paperwork and guessing passwords and dealing with lawyers. So leave your family memories instead of a mess. Grab your Knockbox kit [e-mail] Ramsey for the best discount available. That's knockbox.com Ramsey. How are you guys going to get out of debt if you're continually going into it at this point?

[Dustin]

Amen.

[Dave Ramsey]

I mean do we need to pull the kids out of private school?

[Dustin]

That's kind of what I'm kind of what I'm here kind of what I'm here for.

[Dave Ramsey]

I mean I can't make that decision for you. It's a very personal decision and I step on a lot of toes. But the simple truth is at this state of your personal finances, we can't afford private school. And that is a ridiculous thing to say talking to a guy who makes $500,000 a year.

[Dustin]

Yeah.

[George]

How much is the private school? What's the total amount about?

[Dustin]

I think it's 3,000amonth.

[George]

So you're paying 6,000amonth on private school?

[Dustin]

No, for everyone.

[Dave Ramsey]

3K total. And you guys can't come up with 3k a month making 45,000amonth? I think I. I'm confused why you're going into debt for that.

[George]

I don't think the private school is the problem. I mean, if I. If I. Of all the things I'm seeing, I feel like that would not.

[Dave Ramsey]

It's. That's not going to fix anything. I just think there needs to be a level of, we're done with this, and I'm not. I can tell you're exhausted. I just don't know your level of intensity you're ready to take on. And your wife. Do you guys have anything in savings?

[Dustin]

We're ready to do it. I think most of our savings we've been saving has just been going towards tackling the debt and erasing.

[George]

That's great. I mean, how much do you have in savings and how much have you paid off using it so far?

[Dustin]

We paid off one credit card, 12,000. Another one was 15.

[George]

How much savings do you have left?

[Dustin]

I think we have like four grand in savings going towards the next debt that we're.

[Dave Ramsey]

Okay, here's one way to get out of these cars. It would be to basically pause your debt snowball for a month or two and stack up 30, 40 grand in cash to get out from these underwater cars to sell them and buy some beater cars in the meantime.

[Dustin]

You know, that's, that's what we were thinking. I was driving around with this Tesla, seeing what. Seeing what I can get for it. How would you. So you're saying save.

[Dave Ramsey]

Well, you need the amount you're underwater on. You need the difference in order to clear the title in order to sell it. So that's what I'm saying. If you're underwater by 30 grand, stack up 30 grand really fast so you can clear the title when you sell it.

[George]

We're still, we're still. We're. Listen, you're going to pay off your debt, but we're still not focused on the main, main problem. You make $45,000 a month, and we're talking about 3000 for school, 2400 on cars, that's 5000. And now your mortgage is reasonable. It's 800,000. That's reasonable for what you earn. So that's not killing you. The second mortgage is not killing you. It's your budget, dude. Like you guys are. You guys are just spending. I guarantee no one is thinking on how much. Your wife says, I want to get this bag. She buys the bag. You think, hey, let's redo the carpets. We redo the carpet. I just feel like on a month to month you guys are just going bananas. Because truly George, the things that he's.

[Dave Ramsey]

Saying, it still doesn't add up to more than 20k.

[George]

That's half saying, not even close.

[Dave Ramsey]

Where's the rest going?

[Dustin]

So we do, so we're follow. We're followers of Christ, we're Christians and we do believe in, believe in tithing. We put put aside 20, 20% of our of our budget goes towards like tithing and giving.

[George]

Okay, how much are you investing?

[Dustin]

We have invested any. Just in. We have, we have three rentals.

[George]

Okay.

[Dustin]

We make one that we make a little bit of money on. But the, the other two, we just kind of make what the mortgage is on them.

[George]

Okay.

[Dustin]

We rent. We're renting them to our friends.

[Dave Ramsey]

And it sounds like they're getting a deal and you're getting screwed.

[George]

The money's in these rentals. I think that if you really wanted to go through this fast, you could probably look at those and sell them and take some of the money and pay off this debt. Take all of the money and pay off this debt and simplify your life. But I'm just not convinced that the behavior because talking to you on this call for me, I'm looking at this and going 45, 000 is a lot of money. A month or 45. Yeah. Thousand dollars a month is a lot of money. Where is it? And you're having a hard time looking for it, which lets me know this is out of control. Like this has gone off completely off the rails. You need every dollar budget. I want you to pony up the cash to go online and get it. Every dollar. You need to do that tonight with your wife. You guys are going to be astounded at what you're spending money on. Pull up your bank statements to see and use that to fill in your every dollar budget for the month of May.

[Dave Ramsey]

And if it's not food, utility, shelter, transportation, insurance, or minimum debt payments, it goes away. Which means no more eating out, no more streaming. We're about to be living like we're poor because we are poor while making half a million dollars. It's as insane as it sounds. We're rooting for you, Dustin. It's gonna be a journey, but you'll clean it up fast if you do this stuff. Create your free every dollar budget today. The simplest way to budget for your life.