Sell Our House To Pay Off Our $1,000,000 Of Debt?

Summary

The Ramsey Show Highlights — Episode Summary

Episode Title: Sell Our House To Pay Off Our $1,000,000 Of Debt?
Air Date: October 27, 2025
Host(s): Dave Ramsey, Rachel Cruze
Caller: Larissa
Theme: Should extreme debt (including IRS debt, car loans, and other obligations) ever justify selling your home — or are there better solutions?

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Episode Overview

This compact episode features Dave Ramsey and Rachel Cruze counseling a caller, Larissa, who is grappling with overwhelming debt totaling over a million dollars, including mortgage, student loans, IRS debt, and costly vehicles. With her husband recently laid off and the IRS threatening a lien, Larissa seeks urgent advice: Should they sell their house to escape this financial crisis, or is there a better path forward?

The conversation moves through assessment, tough love, and a step-by-step tactical plan, blending empathy with no-nonsense advice—classic Ramsey Show style.

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Key Discussion Points & Insights

1. Detailed Breakdown of the Caller’s Debt and Situation

• Debt Owed (excluding house): About $500,000–$600,000 on various items:
  • Husband’s and wife’s school loans ($80,000 and $45,000)
  • Debt consolidation loan ($45,000)
  • Two car loans (adding immense financial pressure)
  • IRS debt ($56,000), which is the immediate crisis
• House:
  • Value: $770,000–$800,000
  • Remaining mortgage: $628,000
• Income:
  • Larissa: Returning to full-time at $111,000/year
  • Husband (usually) made $120,000/year, recently laid off
  • Household potential income: ~$230,000, if re-employed
• No Emergency Fund: The family is living paycheck-to-paycheck, with zero margin.

2. Immediate Crisis Areas

a. Employment

• Dave points out that the urgent task is for Larissa’s husband to regain employment, as stability in income is crucial.
• "Number one, crisis, re employment." — Dave Ramsey (03:56)

b. The IRS Debt

• IRS is threatening a lien because of $56,000 owed.

• Immediate recommendation: Contact a Ramsey-endorsed tax professional to negotiate a payment plan and avoid drastic IRS action.

• "They will be able to get on the phone and negotiate with the IRS a payment, an installment payment plan with no lien." — Dave Ramsey (04:13)

• Dave stresses the importance of correcting withholding and quarterly tax payments, especially due to side business/professional freelance work.

c. Spending Habits

• The couple admits their spending is “like teenagers.” Dave and Rachel challenge the lack of planning and the cycle of justification underlying their choices.
• "There's, like, no off button here. This frenetic. There's no plan." — Dave Ramsey (05:43)
• "We spend money like teenagers, you know..." — Larissa (05:40)

3. Should They Sell Their House?

• Short Answer: No — selling the house won’t fix the “mess,” as there’s not enough equity to clear even the IRS and car loans after fees.

• "You don't have. Not gonna get enough to clean up the mess..." — Dave Ramsey (01:47)

• Instead, the focus should be on:

  • Keeping the house (for now)
  • Fixing cashflow and systems
  • Aggressively attacking debt in order of urgency

4. The Cars: “Absolute Freaking Insanity”

• The car situation is singled out as the worst financial decision; the couple is severely upside-down, paying for luxury they absolutely cannot afford.
• Dave uses his trademark humor and candor with lines like:
  • "This is absolute freaking insanity. If you look up crazy in the dictionary, you're going to see a picture of these cars." — Dave Ramsey (06:48)
• Rachel Cruze points out: "It adds up to what you guys make a year!" (07:08)
• Solution: Sell the extravagant cars, replace them with modest vehicles in the $5,000–$6,000 range, and throw their full income at cleaning up debt.

5. The Power of High Income — If You Control Spending

• The hosts drive home that a $230,000 annual income is more than enough to resolve the debt disaster — but only with a radical change to spending and organization.
• "The quarter million dollars a year will clean this mess up." — Dave Ramsey (08:11)
• "Even with that great income, you guys were living beyond it." — Rachel Cruze (08:36)

6. Lasting Mindset Shift

• Dave puts it bluntly: They need to stop spending "like drunken congressmen."

• "Neither one of us are in Congress. We can't spend like this anymore. It's been like a drunken congressman. I mean, it's out of control." — Dave Ramsey (08:44)

  • Rachel quips, "Drunken congressman." (08:54)

• The takeaway: Living within means is not just a Ramsey principle — it's basic math and life logic.

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Notable Quotes & Moments (Timestamps)

• Caller’s self-assessment:
  • "We spend money like teenagers, you know, like the way." — Larissa (05:40)
• On the car loans:
  • "If you look up crazy in the dictionary, you're going to see a picture of these cars." — Dave Ramsey (06:48)
• On IRS urgency:
  • "Get on ramseysolutions.com and talk to one of our tax endorsed local providers...they will be able to get on the phone and negotiate with the IRS a payment, an installment payment plan with no lien." — Dave Ramsey (04:13)
• On hopeful future:
  • "What if you didn't have any payments but a house payment...and you made a quarter of a million dollars a year. Oh, my goodness. You would have money." — Dave Ramsey (08:22)
  • "That's all I imagine these days." — Larissa (08:20)

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Action Plan Recap

1. Husband finds new employment (re-stabilize income)
2. Contact a tax pro to negotiate with the IRS & get on a payment plan
3. Fix tax withholdings and quarterly payments
4. Sell both expensive vehicles, purchase simple ones
5. Organize finances with detail, using a budget (Every Dollar App recommended)
6. Aggressively attack debt with the newfound, well-directed income
7. End the overspending cycle:
   • "Neither one of us are in Congress. We can't spend like this anymore." — Dave Ramsey (08:44)

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Tone & Style

• Direct, witty, compassionate: Classic Ramsey honesty, with a mix of tough love and encouragement.
• Empowerment through discipline: Though the situation is dire, Dave and Rachel highlight that success is possible with focus and organization.

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Final Summary

Selling the house is not the solution. With actionable steps and renewed control of their solid income, Larissa and her husband can get out from under even this mountainous debt. But it requires urgent career stabilization, ruthless expense cuts—especially trading in the cars for something modest—and above all, a reset of habits and mindset about money. The show ends on an optimistic note: with the right plan, even seemingly hopeless financial chaos can be conquered.

Transcript

[Dave Ramsey]

Brought to you by the Every Dollar App. Start budgeting for free today.

[Caller]

I'm wondering if, like, my situation is one of the kind of rare cases where you would suggest that I should sell my house to pay down debt. And if not, then what should I do?

[Dave Ramsey]

Okay, how much debt do you have, not counting your house?

[Caller]

Around 5 or 600,000.

[Dave Ramsey]

Whoa. On what?

[Caller]

My husband's school loans are 80,000. My school loans are 45. We have a debt consolidation loan for 45. And, you know, two cars that are ridiculously, like, the worst thing you've ever heard. I'll tell you if you want to hear it, but I don't think you want to hear it. You might die.

[Dave Ramsey]

Just give me the total.

[Caller]

The total owed. 67,000 on mine, 62,000 on my husband's.

[Dave Ramsey]

Yeah, you're right. Okay.

[Caller]

And the big. The big thing, I think the main reason I'm calling today is we owe the IRS $56,000, and they want to put a lien on our house because we owe over 50,000.

[Dave Ramsey]

Yeah. What. What's your household income?

[Caller]

I'm about to go back full time making 111,000, and my husband usually would be making around 120, but he was just laid off at the beginning of the month. And that's another part of the story is we have no emergency funds, so we're rocking it over here.

[Dave Ramsey]

Oh, gosh, I'm so sorry. So normally you would be at, like. I mean, if you get everything going again, you'd be at like 230.

[Caller]

Yeah.

[Dave Ramsey]

And the house is worth what?

[Caller]

It's probably worth between 770 and 800.

[Dave Ramsey]

Okay. And what do you owe on it?

[Caller]

628.

[Dave Ramsey]

Okay.

[Caller]

Well, my worry there is, like, after agent fees and closing costs. Yeah.

[Dave Ramsey]

You don't have. Not gonna get enough to clean up the mess, so. The mess.

[Caller]

Yeah. I think it would help us with the IRS and maybe to pay out the cars. You know what I mean? The negative.

[Dave Ramsey]

How do you end up owning the IRS? 56,000.

[Caller]

Oh, man. So me and my husband, we've been married 22 years. We had three kids, very young, super broke back then. So we were on, like, Medicaid, food stamps, everything like that. We just never had money right then, kind of like out of nowhere when he graduated college. And then I kind of landed in my career, we started making money out of nowhere, and we didn't realize that we weren't getting enough taken out of our checks, yada, yada. So one year after another year after another year, it was A like, we owed 12,000. We're like, what? I guess it's just tax bracket. I don't understand this Next year was like, we owed 20,000. We're like, why is this happening? I don't get it. So genius me this year I finally met with an accountant who told me that I wasn't getting enough taken out of my checks. Also, I have like a side business where I design and develop websites and stuff. So I haven't been doing good at prepaying those taxes either. So it's like, it's just a big hot mess of garbage that you know.

[Dave Ramsey]

So what do you make?

[Caller]

Adult body. I think this year it was like 30.

[Dave Ramsey]

Okay. All right. So. Well, what you have is a series of crises.

[Caller]

Yes.

[Dave Ramsey]

And you really have to probably work on three of them at least at once. And sadly, the house won't fix them.

[Caller]

Right.

[Dave Ramsey]

So, you know, what's your husband do for a living? What's his career?

[Caller]

He's a software quality engineer.

[Dave Ramsey]

Great. Okay. So he's very employable.

[Caller]

Yeah.

[Dave Ramsey]

Okay. Why did he leave?

[Caller]

He was in like an 18 month contract and they didn't renew it. Okay.

[Dave Ramsey]

Just doing contract work. Okay. Which is another time you didn't pay the IRS.

[Caller]

Well, I mean, it was a W2, so.

[Dave Ramsey]

Oh, a contract, W2. Okay. All right. Anyway, so the good news, the good news is he's probably can lean in, put a smile on his face, a pep in his step, brush his teeth and get a job pretty quick.

[Caller]

Yeah.

[Dave Ramsey]

Okay. Because this is pretty employable situation. All right, so number one, crisis, re employment. Okay, number two crisis, the IRS. You need to get on ramseysolutions.com and talk to one of our tax endorsed local providers, one of the people we endorse in your area, and they will be able to get on the phone and negotiate with the IRS a payment, an installment payment plan with no lien. And even if they put a lien, they won't do anything with it because they don't want to pay $628,000 for a house.

[Caller]

Yeah.

[Dave Ramsey]

They're not going to do anything with your lien. So what you don't want them doing is leaning your checking accounts and cleaning out your bank accounts because that would be disastrous. So you do need to get them, you need to get them on a payment plan. And of course part of that is you really do have to source this all the way to the bottom and make sure we sit with your tax person. And if you need a new tax person, you can get them at Ramsey as Well, sounds like you may. And make sure you've got the right amount coming out of your taxes and that you are doing your quarterly estimates on your business, and you file those, and you file that money on time. Once a quarter. You're supposed to figure out what your profit is and pay tax on it.

[Caller]

Yeah.

[Dave Ramsey]

That's the law. And you're getting hammered with penalties and interest in addition to them coming after you for the balance. Okay. So they get after you on that stuff, on that 30,000. They're wearing you out. So, you know, get on top of that with your systems and your processes, because you're not dumb people. You're just highly chaotic and disorganized.

[Caller]

Yeah. I keep saying we spend money like teenagers, you know, like the way.

[Dave Ramsey]

Yeah, you've been doing that, too. That's another subject I'm coming to in a minute. But you're just out of control. I mean, there's, like, no off button here. This frenetic. There's no plan. And so what I'm telling you to do is get very systematized and nerdy about this. Like, I hired you to straighten out these people's finance, only these people as you.

[Caller]

Yeah, I actually did a literal PowerPoint presentation and excel sheet before I called you guys to, like, understand what my picture was here.

[Dave Ramsey]

Well, good. That's. That. That's a really good start step, actually. You got to get it. You know, that's. You know, I'm looking at the map, and the little red arrow says, you are here. I want to get over there. And now, how do I get over there? Right. So that's what we're talking about. So, Job, get the IRS under control first with a payment plan and with proper withholding and proper filings of your quarterly estimates. Then we'll begin to pay them off as quickly as we can. And then we come to the cars.

[Caller]

Yeah, they're both going to be ready to get rid of them.

[Dave Ramsey]

Oh, you have to. Like, you have to.

[Caller]

We have negative equity.

[Dave Ramsey]

This is absolute freaking insanity. If you look up crazy in the dictionary, you're going to see a picture of these cars.

[Caller]

I was expecting you to say that. Yeah, I thought you were going to say me, but okay.

[Dave Ramsey]

No, no. I mean, this is just. Yeah, because it's killing my friend Larissa.

[Caller]

Yeah.

[Dave Ramsey]

My friend Larissa. These cars own her.

[Rachel Cruze]

Yeah, well, it adds up to what you guys make a year. You know?

[Dave Ramsey]

I mean, y' all don't make nearly enough to have those cars, even if you paid cash for them.

[Caller]

Yeah, I think like our situation is that, like we've never been late on a car payment on our mortgage, which is.

[Dave Ramsey]

Are you going to try to justify this to me? Please don't.

[Caller]

No, no, I'm telling you, that's why we thought we were okay.

[Rachel Cruze]

Yeah, I know you could afford the payment.

[Caller]

IRS thing made me look at it. You see what I'm saying?

[Dave Ramsey]

You realize when you look at these cars that they're a glaring. Not just a Dave Ramsey thing or a Rachel Cruz thing, they're just a glaring math thing.

[Caller]

Yeah, yeah.

[Dave Ramsey]

I mean, they're just pointing to you guys. Like you said, we spend money like teenagers, you know, and so you need to get you a couple of, you know, reasonable vehicles, very cheap, like five, six thousand bucks a piece. And you guys use your $230,000 income to clean up this freaking mess. So you get your life back. Because you're not having fun.

[Caller]

Yeah.

[Dave Ramsey]

This is highly anxiety inducing.

[Caller]

Yeah.

[Rachel Cruze]

And when he gets a job back, you know, you guys are making great money, like insane.

[Dave Ramsey]

So the, the quarter million dollars a year will clean this mess up?

[Rachel Cruze]

Yes. Yeah. You guys can do that. And then if you could imagine making that amount of money and actually keeping it and it not going out in payments, you know, and you guys trust.

[Caller]

Me, that's all I imagine these days.

[Dave Ramsey]

What if you didn't have any payments but a house payment.

[Rachel Cruze]

Yes.

[Dave Ramsey]

And you made a quarter of a million dollars a year. Oh, my goodness. You would have money.

[Caller]

Yeah. I can't imagine it.

[Dave Ramsey]

And then you can move from a $6,000 car to a $20,000.

[Rachel Cruze]

But that's the thing though, is even though that's an incredible income, you still have to live within that income. Because even with that great income, you guys were living beyond it. Right.

[Dave Ramsey]

You two just need to sit down, look at each other. Neither one of us are in Congress.

[Caller]

Right.

[Dave Ramsey]

We can't spend like this anymore. It's been like a drunken congressman. I mean, it's out of control.

[Rachel Cruze]

Drunken congressman.

[Dave Ramsey]

Well, they say drunken sailors, but I like sailors. Right. You know, sailors. Bless their hearts. They're probably way fiscally responsible compared. So even with alcohol involved. Create your free every dollar budget today. The simplest way to budget for your life.