"This Is An Impossible Budget" (Dave Ramsey Is Shocked)

Summary

Detailed Summary of "This Is An Impossible Budget" Episode from The Ramsey Show Highlights

Release Date: April 22, 2025
Duration: Approximately 8 minutes

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Introduction

In the episode titled "This Is An Impossible Budget (Dave Ramsey Is Shocked)," hosted by the Ramsey Network, Dave Ramsey addresses a listener named John who is grappling with an unsustainable financial situation. The conversation delves into the strains of an exorbitant mortgage, strained personal relationships, and the challenges of maintaining a balanced budget.

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Listener's Financial Predicament

John's Dilemma (00:06 - 01:31):
John reaches out with two primary concerns:

1. Expensive Mortgage: He purchased a house a few years prior, which turned out to be a "lemon." Since then, he has been dedicating significant time and resources to repair the property, aiming to increase its market value for potential rental or sale.
2. Strained Relationship: John recently moved in with his partner, and balancing time for the relationship alongside managing the hefty mortgage has become challenging.

He discloses that his monthly mortgage payment is $5,300 with a take-home income of approximately $7,700. This leaves John with a mere $2,400 for all other expenses, making it exceedingly difficult to manage daily living costs.

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Dave Ramsey's Assessment

Analyzing the Budget (01:20 - 02:43):
Dave Ramsey expresses disbelief over John's budget, stating, "Your mortgage payment is 75% of your take-home pay. That's not sustainable." He emphasizes that such a high percentage allocated to housing is unsustainable and shockingly above the recommended guidelines.

John mentions he doesn't have consumer debt apart from the mortgage, but he's been burning through his savings at a rate of $1,000 to $1,500 monthly to cover expenses and repairs.

Key Quote:

• Dave Ramsey [02:00]: "This is impossible. I've done budgets for 35 years. Your mortgage is 75% of your take-home pay. That's not sustainable."

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Expert Advice and Solutions

Immediate Recommendation to Sell (02:54 - 03:53):
Dave Ramsey and Rachel Cruze unanimously advise John to sell the house immediately. They highlight that the current financial strain is not only untenable but is also detrimental to his mental and emotional well-being.

Rachel Cruze's Input:
Rachel emphasizes the importance of relieving stress and restoring balance in John’s life. She points out the misconception that high-value neighborhoods automatically translate to profitable investments, especially when income doesn't align with exorbitant living costs.

Key Quotes:

• Dave Ramsey [02:20]: "You need to sell this house yesterday."
• Rachel Cruze [03:44]: "I think it's going to relieve a lot of stress."

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Emotional and Mental Well-being

Impact on Personal Life (03:53 - 05:02):
Dave Ramsey delves deeper into the non-financial costs of maintaining such a burdensome mortgage. He describes the psychological weight John carries, likening it to carrying a heavy load constantly. Letting go of the house would not only alleviate financial stress but also significantly improve John's overall quality of life.

Key Quote:

• Dave Ramsey [03:53]: "You're feeling physically going to feel the release when you get rid of this burden... This is a horrible thing for you. It's not good for John. I want John to have a home. I just don't want the home to have John."

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Encouragement and Final Thoughts

Supporting John's Decision (05:42 - 06:58):
Rachel Cruze introduces a light-hearted moment by referencing the song "Let It Go" from Disney's Frozen, encouraging John to embrace the decision to sell his house. Both Dave and Rachel stress that material possessions, such as homes, should not come at the expense of personal happiness and financial stability.

Key Quotes:

• Rachel Cruze [05:42]: "Are you gonna sing little Elsa for us? A little 'Let it go.'"
• Dave Ramsey [07:35]: "Sell it, please. No, I'm not sorry. I'm happy."

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Conclusion

In this compelling episode, Dave Ramsey and Rachel Cruze address the critical issue of overspending on mortgages, especially in high-cost areas like the San Francisco Bay Area. They provide a clear, no-nonsense solution: sell the unaffordable house to regain financial stability and peace of mind. The conversation underscores the importance of aligning one's lifestyle with their income and the profound impact that financial decisions can have on personal well-being and relationships.

Final Takeaway:
Maintaining a sustainable budget is paramount. When expenses, particularly housing, consume an unsustainable portion of income, it’s essential to reassess and make necessary changes to preserve financial health and personal happiness.

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Notable Quotes with Timestamps:

• Dave Ramsey [02:00]: "This is impossible. I've done budgets for 35 years. Your mortgage is 75% of your take-home pay. That's not sustainable."
• Dave Ramsey [02:20]: "You need to sell this house yesterday."
• Rachel Cruze [03:44]: "I think it's going to relieve a lot of stress."
• Dave Ramsey [03:53]: "This is a horrible thing for you. It's not good for John. I want John to have a home. I just don't want the home to have John."
• Rachel Cruze [05:42]: "Are you gonna sing little Elsa for us? A little 'Let it go.'"
• Dave Ramsey [07:35]: "Sell it, please. No, I'm not sorry. I'm happy."

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This episode serves as a poignant reminder of the importance of sustainable financial planning and the courage needed to make tough decisions for long-term well-being.

Transcript

[Dave Ramsey]

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

[John]

I'm trying to balance a couple things so I have sort of two questions. One is related to a really expensive mortgage I have. I bought a house a few years ago and I discovered soon enough that it was a bit of a lemon. Since then I've been sort of spending all of my time repairing this house and trying to get it up to market value in hopes to, oh, I don't know, rent it or sell it or do something with it that could be profitable. And the second thing is that, you know, a couple years ago I also met a lovely lady and she's just about last year moved in with me. And it's been a bit of a struggle trying to have, have enough time for the relationship, manage the finances as I sort of continue to progress with this very expensive mortgage.

[Dave Ramsey]

How much is your mortgage payment?

[John]

It's 5,300amonth.

[Dave Ramsey]

And what is your take home Pacer?

[John]

My take home is about 7,700amonth.

[Dave Ramsey]

Your mortgage payment? Your mortgage payment is 5,000 and your take home is 7,000. I don't know how you eat.

[John]

That's about right.

[Dave Ramsey]

How do you eat?

[John]

It's been, it's been tricky.

[Dave Ramsey]

Are you running up credit card debt?

[John]

I don't have any consumer debt.

[Dave Ramsey]

Is there money somewhere else coming in or going out? How in the world. That's an impossible budget.

[John]

It's pretty tight. Yeah. I've had to do right. A lot of the house repairs myself.

[Dave Ramsey]

I keep things you're cutting in and out, talk spots, talk directly into your phone. What'd you say?

[John]

Oh, I have to keep a pretty tight budget. That's right.

[Dave Ramsey]

No, you don't have a budget. This is impossible. I've done budgets for 35 years. Your mortgage is 75% of your take home pay. That's not sustainable. I'm shocked you've done that for more than 12 months and not caved in.

[John]

I agree with you.

[Dave Ramsey]

You need to sell this house yesterday.

[Rachel Cruze]

Do you have a lot of savings, John? Are you feeding your, Are you pulling from savings at all?

[John]

Yeah, yeah. So I have about 30 in emergency and about 80 in stocks.

[Dave Ramsey]

And how much are you burning through each month of your savings?

[John]

I would say, you know, maybe a thousand, maybe fifteen hundred.

[Dave Ramsey]

Yeah. Okay, now we got it where you can eat. Now I understand how. Because it's. I mean what you were telling me just wasn't so. So basically you're burning up your savings because you bought a house. You can't Afford. Sell it.

[John]

Yep, yep. Yeah. Okay. Yeah. So that, that's really. It is. Should I, should I jump ship?

[Dave Ramsey]

Yes. Killing, you know, eating you alive. There's nothing in this home ownership package that is fun. Everything you've described to me screams anxiety.

[Rachel Cruze]

You knew this, right?

[John]

Like, well, it's, it's in a high value neighborhood. It's market here. High demand San Francisco Bay area than your income not to see, see the stars and, and you know, the grass is always greener on the other side, so to speak.

[Dave Ramsey]

But yeah, easier. Grass is always greener over the septic tank. Yeah.

[John]

Yeah, exactly.

[Rachel Cruze]

Well, sell it, John. I think it's going to relieve a lot of stress.

[Dave Ramsey]

John.

[Rachel Cruze]

I think your relationship will thrive, your finances will thrive. A lot will thrive when you're not stressed. I want you stress to the max about this. I mean, that's, that's hard.

[Dave Ramsey]

Here's the thing. Not. Not only is the arithmetic absolutely ridiculous in this because you're burning savings arithmetic, you're saying, you're saying the mathematics of this, you're saying it's, it's, you know, you're burning through your sa. So that's principle number one. But what I want you to breathe in also is what this is costing you. The stress level you're carrying around all the time. When you get rid of this house, you're going to feel like you set down £300 that was on your back and you've kind of gotten accustomed to carrying around £300. But when you set it down, you're going to go, I can breathe again. I didn't realize you could breathe like this. My lungs haven't worked like this since I bought this house. I mean, you're feeling physically going to feel the release when you get rid of this burden. But you've intellectually and willed your way through this. You're like a bulldog that got a hold of something and won't let go. But once you let go, you're like, oh, I can let go and I'm free and I can breathe again. No, dude, this is not, there's nothing in this equation that's worth it. It's affecting your health long term. It's going to destroy your finances. It's affecting your emotional well being. Now you said it's affect your relationships. So this thing, this house owns you and you're going to be singing like, thank God, I'm free at last when you get. And you don't even know, you don't until you set yourself free. You don't even Know how much, how awesome it's going to be. This is a horrible thing for you. It's not good for John. I want John to have a home. I just don't want the home to have John. And this one owns you, my son. It owns you. Let it go.

[Rachel Cruze]

Are you gonna sing little Elsa for us? A little Let it go.

[Dave Ramsey]

Who's Elsa?

[Rachel Cruze]

It's from Frozen.

[Dave Ramsey]

Oh, okay.

[Rachel Cruze]

The granddaughters will teach you that.

[Dave Ramsey]

Okay. Soon enough.

[Rachel Cruze]

Soon enough. Let it go, John.

[Dave Ramsey]

We need to cue the granddaughters to sing Let it go.

[Rachel Cruze]

That's right. That's right. You know, it was so, you know, it's so common to. For us. I'm not equal for that as Americans though, to be so wrapped up in our stuff. And I would put homes in this home, cars in this credit card debt, all of it. That for the sake of a thing, right. In a house, in of itself. It's a thing that we deteriorate so much of our peace and our mental margin and our stress and like, I mean so much of it for a thing. And it's not worth it, even a house. And again, homeownership is something that like we are all about and we want you to get it and have that be part of your long term financial plan, but to the point that it's completely robbing you of a life and it's eating away at your relationships and your peace, all of it. It's just a thing. It's not worth it. It's not worth it. So as Dave and Elsa would say.

[Dave Ramsey]

Yeah, well. And the minimalist. Yeah, we can just play their tune right now. They would love this.

[Rachel Cruze]

Yeah, yeah, yeah. Exactly.

[Dave Ramsey]

Yeah. So, yes, we do want you to own a home. You said you're new to this stuff, but it's much, much less home than you own right now.

[Rachel Cruze]

And which is hard too, John, because you're in one of the most expensive real estate, San Francisco. Yeah. In the Bay Area. I mean, you're in one of the highest priced.

[Dave Ramsey]

Tokyo, New York and Silicon Valley. I mean, London. These are some of the most expensive pieces of real estate in the world. And that's where you're choosing to live, making $75,000 a year.

[Rachel Cruze]

Well, that's after taxes. Yeah, well, so California, he's probably making 140. And they're taking.

[Dave Ramsey]

That's true.

[Rachel Cruze]

Sorry, John.

[Dave Ramsey]

Sell it, please. No, I'm not sorry. I'm. I'm happy.

[Rachel Cruze]

I am.

[Dave Ramsey]

I'm gonna set you free. Now what you thought was a dream's a nightmare. I'M gonna set you free from your nightmare Create your free every dollar budget today the simplest way to budget for your life.