Our Investors Embezzled Over A Million Dollars (We Lost Our Income)

Summary

The Ramsey Show Highlights — May 10, 2026

Episode Title: Our Investors Embezzled Over A Million Dollars (We Lost Our Income)

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Episode Overview

In this episode, Tracy calls into The Ramsey Show seeking urgent financial advice after suffering a devastating blow to her family's income and assets due to an embezzlement of $1.6 million from their business. This loss, combined with rising costs and dwindling savings, has put Tracy's family at a severe monthly deficit and significant debt. The advisors walk her through the reality of her situation, the importance of brutally honest assessment, and tangible steps toward recovery, even discussing the potential for bankruptcy and extreme downsizing.

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Key Discussion Points & Insights

1. Caller’s Situation: Financial Crisis After Embezzlement

• Tracy describes compounding financial hardship:
  • Major loss of income due to a business partner’s embezzlement of $1.6 million.
  • Family's income formerly averaged $250,000 a year but now struggles with a $5,000/month deficit.
  • All savings depleted; turned to credit cards, family loans, and asset liquidation.
• Notable Quote:

  "We've blown through all of our savings trying to, you know, stay afloat. Went to credit cards… we're still behind. Borrowed from family… Right now we are running at about a $5,000 deficit a month…"
  — Tracy (00:06)

2. Current Monthly Finances Breakdown

• Variable household income: $12,000–$17,000/month (~$250,000/year).

• Primary expenses:

  • $4,300 on credit card payments at high interest rates (12–30%).
  • $5,500 mortgage payment (~$700k home, $550k owed after equity extraction).
  • $3,000–$5,000 business expenses paid from business accounts.
  • $1,700/month for remaining kids’ college costs after scholarships.
  • Total monthly outflow: approx. $20,000.

• Notable exchange:

  "And you are… So you guys make $250,000 a month or… I'm sorry. A year."
  "Yes."
  — Financial Advisor 1 & Tracy (01:08–01:14)

3. How the Embezzlement Occurred and Its Impact

• Embezzlement was from investors’ funds managed by Tracy’s business, not personal debt, but it obliterated their income stream.

• Ongoing legal action, but no immediate restitution or criminal consequences for perpetrator.

• The business had to slash expenses, liquidate poor-performing assets, and Tracy reports she’s no longer taking a salary.

• Notable quote:

  "They embezzled about 1.6 million."
  — Tracy (02:26) "Are they in jail?"
  "No… It happened in a big city, and they have bigger fish to fry."
  — Financial Advisor 1 & Tracy (02:32–02:36)

4. Current Debt Load

• Total non-mortgage debt: about $270,000

  • $152,000 in credit cards
  • $30,000 owed to family
  • $88,000 in unpaid taxes (IRS back taxes due to employee mishandling filings)

• Mortgage situation: large monthly payment relative to current take-home pay

• Cars are paid off; no assets left to sell of significant value.

• Notable Exchange:

  "Just credit cards is 152. We owe family 30 and then we owe 88 in back taxes. We had an employee that said she was filing them and she did not."
  — Tracy (06:03)

5. Advisor Recommendations and Stark Reality Check

• Advisors underscore the need for a painful but necessary reality check:

  • Separate business and personal finances immediately.
  • Implement the debt snowball method: list all debts smallest to largest, attack the smallest first with intensity, keep up minimums on the rest.
  • Income must increase; expenses must decrease — drastically.
  • Prioritize the “four walls”: food, shelter, utilities, transportation.
  • Kids’ college is a luxury; family wellbeing comes first ("Sorry kids. Mom and dad are broke.").
  • Consider selling the house/downsizing; potentially cash out retirement if necessary to avoid bankruptcy.
  • IRS/tax debt must be prioritized over all other debts.
  • Advisors warn against further credit or family borrowing and stress the need for extreme sacrifice.

• Notable Quotes:

  "Whatever that $5,000 is below the line. Food, shelter, utilities, transportation. You get your four walls… Everything else below is a want. Like kids in college. Sorry kids. Mom and dad are broke."
  — Financial Advisor 1 (06:36)

  "We're on the brink of bankruptcy. We can't keep paying your rent. Like we're done mathematically. We can't keep up our lifestyle… The sacrifice is so deep."
  — Financial Advisor 1 (07:04)

  "This mortgage is huge compared to what your take home pay is now… So you might need to look into selling the house and downsizing if you can't solve this within six months."
  — Financial Advisor 2 (07:41)

  "You sell everything, including the house, to avoid a bankruptcy… but the IRS goes to the top."
  — Financial Advisor 1 (07:55)

  "I heard a lot of, well, this person… At some point we got to look in the mirror and go, I'm responsible. I'm the one in charge here."
  — Financial Advisor 2 (08:12)

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Memorable Moments & Quotes

• On responsibility:

  "At some point we got to look in the mirror and go, I'm responsible. I'm the one in charge here."
  — Financial Advisor 2 (08:12)

• On tough choices:

  "We can't keep up our lifestyle… The sacrifice is so deep."
  — Financial Advisor 1 (07:04)

• On debt strategy:

  "Debt snowballing this, listing it all out small to largest balance and attacking the smallest one with a vengeance…"
  — Financial Advisor 2 (06:23)

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Key Timestamps

• 00:06 — Tracy describes the financial disaster and deficit.
• 01:50 — Tracy admits high-interest debt payments.
• 02:15–02:39 — Embezzlement details and its effect on the business.
• 03:43 — Mortgage and equity withdrawal explained.
• 04:36–05:17 — College expenses and business/personal account confusion.
• 06:03 — Exact non-mortgage debt breakdown.
• 06:23–08:12 — Advisors lay out the necessary—if harsh—attitude and steps needed to survive the crisis.

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Summary Takeaways

• The episode highlights the devastating ripple effect of embezzlement on a family’s income and overall financial health.
• Tough, practical advice emphasizes drastic cost-cutting, prioritizing essentials over luxuries, and personal responsibility amid extreme setbacks.
• Advisors recommend separating finances, following a strict debt repayment strategy, and potentially major life changes (downsizing, selling assets) to avoid bankruptcy, with tax debt prioritized first.
• Emotional undertones ground the conversation in empathy but affirm the need for radical change.

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Useful For:
Anyone facing significant financial setbacks, business owners managing other people's money, and families debating when bankruptcy might truly be the last resort. The tone blends hard truth with empathetic urgency, offering actionable steps for digging out of crisis.

Transcript

[Podcast Host/Announcer]

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[Tracy (Caller)]

Long story short, we've had some financial losses that were out of our control. You know, our income has gone down, our costs have gone up. We've blown through all of our savings trying to, you know, stay afloat. Went to credit cards to, you know, for all of our business, business expenses, our household expenses, all of those things. And we're, we're still behind. Borrow from family, all of the things. Right now we are running at about a $5,000 deficit a month even, you know, all things considered. I'm just trying to figure out, you know, do we. At what point do you give up and file bankruptcy? You know, do we keep trying to dig out of this? Like, what is the smartest path forward with everything that's happened?

[Financial Advisor 1]

So what do you guys make? What are you bringing in a month?

[Tracy (Caller)]

We, it's, it's variable, so it's about 12 to. To 17, but 250 a year on average.

[Financial Advisor 1]

Okay, and you're. And you are. So you guys make $250,000 a month or. I'm sorry. I'm sorry. A year.

[Tracy (Caller)]

Yes.

[Financial Advisor 1]

And you're still behind $5,000 a month. What are you guys spending your money on?

[Podcast Host/Announcer]

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[Financial Advisor 1]

What are you guys spending your money on?

[Tracy (Caller)]

Well, a lot of it is going toward credit cards. So about $4,300 a month is credit cards and fees. Unfortunately, a bunch of our cards are, you know, 12 to 30% interest. So I've reached out to them for their hardship programs and tried to get the interest down so that we're able to tackle more of the debt.

[Financial Advisor 2]

What part of this wasn't in your control? You were saying something about how it's not. It wasn't in your control.

[Tracy (Caller)]

Yeah, yeah, yeah. One of our companies that we run, someone had embezzled money from us, and it took away about 70 or 80% of our income.

[Financial Advisor 2]

How much money are we talking about?

[Tracy (Caller)]

They embezzled about 1.6 million.

[Financial Advisor 1]

Oh, my gosh.

[Tracy (Caller)]

Total? Yeah.

[Financial Advisor 1]

Are they in jail?

[Tracy (Caller)]

No, no. It happened in a big city, and they have bigger fish to fry. So.

[Financial Advisor 2]

What do you mean you didn't press charges?

[Tracy (Caller)]

It's. It's all. I don't know how much I can say. They're working on it, but.

[Financial Advisor 2]

So do you have an attorney?

[Tracy (Caller)]

Yes, yes, we've got an attorney that's working on it for us.

[Podcast Host/Announcer]

You acted like you're like, well, it's

[Financial Advisor 2]

water under the bridge. We're moving on. Big city. What can you do?

[Tracy (Caller)]

No, we had investors, and it was our investors money that was. It was a whole situation. But.

[Financial Advisor 2]

So it wasn't your money to begin with. You didn't go into debt? 1.6 million?

[Tracy (Caller)]

No, no, no. But we managed that fund, and when the fund disappeared, our income disappeared. So we, you know, we've taken on additional jobs. We've cut business expenses that we didn't need, you know, sold assets that weren't performing, you know, so we're, you know, selling everything that, you know, the. Like. Yeah, what's the saying? Like, sell so much, the kids think they're next, so. Yeah. Yeah.

[Financial Advisor 1]

Okay, so what other debt do you guys have? Tracy? I'm just trying to figure out where. Where $15,000 a month is going. How much is your. How much is your mortgage?

[Tracy (Caller)]

The mortgage is 5,500. We did take out some of our equity to try to pay down. Pay down our assets, so. Or our debt. So the. The home is worth about 700, and we owe about 550 on the. On the mortgage. So.

[Financial Advisor 2]

Okay, so was that a HELOC you took out or a home equity loan?

[Tracy (Caller)]

Financed? Yeah, we just financed. And then we've got about three to $5,000 a month that's going out in expenses for the businesses that we run out of our home. So. So we've got, you know, the 4,300 in debt service, you know, 13 to $14,000 in monthly expenses, kids in college, you know, all of. All of those things. You know, tuition, rent, and then our business expenses. So it comes out to about $20,000 a month.

[Financial Advisor 1]

Okay. Is your business expenses, Tracy, not with Inside the business. Why is that coming out of your personal budget?

[Tracy (Caller)]

Yeah, well, it's kind of all in one lump now, like, because we're just trying to current. So, like, I'm not even taking a.

[Financial Advisor 2]

But you have a business checking account, and you have a personal checking account, and you're paying business expenses from the business checking.

[Tracy (Caller)]

Yes, everything is coming from business checking. I'm not taking a paycheck from.

[Financial Advisor 1]

But the 3 to 5,000 on business expenses is coming out of a business account. That has nothing to do with the 12,000 you're bringing home every month, correct?

[Tracy (Caller)]

Sure. Yeah.

[Financial Advisor 1]

Okay. I mean, yeah. And I would separate it out. Okay, so then you got kids in college.

[Tracy (Caller)]

Yes.

[Financial Advisor 1]

Are they working

[Financial Advisor 2]

directly in your phone? Tracy, we're having a hard time.

[Tracy (Caller)]

Yeah, yeah, sorry. They've. We've got scholarships and grants so there's not a lot that's coming out. It's about seventeen hundred dollars a month left over in tuitions and fees. But they are applying for scholarships like it is their full time job.

[Financial Advisor 2]

Okay, and what's the total amount of debt you guys carry outside of your mortgage?

[Tracy (Caller)]

So the total debt we have some unpaid taxes, so it's hovering at about $270,000.

[Financial Advisor 2]

Goodness gracious.

[Financial Advisor 1]

Wait, does that include the business?

[Tracy (Caller)]

Yeah, those are business.

[Financial Advisor 1]

Separate that out. What is just credit cards?

[Tracy (Caller)]

Just credit cards is 152. We owe family 30 and then we owe 88 in back taxes. We had an employee that said she was filing them and she did not. So we've had some, some things pile up. So we're just trying to doggy paddle through and figure it out.

[Financial Advisor 2]

The key is going to be just debt snowballing this, listing it all out small to largest balance and attacking the smallest one with a vengeance and just keeping up with minimum payments on the rest and. But the income needs to go up and expenses need to continue to go down. Even just to work.

[Financial Advisor 1]

Yeah. I mean Tracy, the way to do it, and it's going to be harsh, but you guys have to make a list of everything. And when the money runs out, the money runs out and we stop. We do not continue to borrow from on credit cards. We don't continue to borrow from family. Whatever that $5,000 is below the line. Food, shelter, utilities, transportation. You get your four walls, you pay your insurance. Everything else below is a want. Like kids in college. Sorry kids. Mom and dad are broke.

[Financial Advisor 2]

That's a luxury.

[Financial Advisor 1]

We're on the brink of bankruptcy. We can't keep paying your rent. Like we're done mathematically. We can't keep up our lifestyle. And I think there has you, you and your husband. You guys have to come to a really hard reality of that. We, we can't keep doing this. And I know that's why you're calling us but like that, that has to seep so far down that the sacrifice is so deep. Like you know, do you guys have in anything owed on the cars at all or are those paid off?

[Financial Advisor 2]

Sorry you broke up again, Tracy.

[Tracy (Caller)]

Oh, sorry. No cars are paid for. We drive old cars. They even tried to sell them and see if we could put.

[Financial Advisor 2]

You know, here's the. Another issue is this mortgage is huge compared to what your take home pay is now, which is 12 grand. It's almost half your take home pay just in this new mortgage. So you might need to look into selling the house and downsizing if you can't solve this within six months.

[Financial Advisor 1]

Yeah, because you asked about, you know, when do you just file bankruptcy? Well, you. You sell everything, including the house to avoid a bankruptcy, you know, even cash. I don't want you to right now because we don't have enough time to dig into the numbers of like a 401. You do all of that to avoid a bankruptcy, but the IRS goes to the top.

[Financial Advisor 2]

That's the first thing in your debt snowball right now is those back taxes. And Tracy, I heard a lot of, well, this person. Well, was there at some point we got to look in the mirror and go, I'm responsible. I'm the one in charge here.

[Podcast Host/Announcer]

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