We Are Drowning in Debt!

Summary

Podcast Summary: The Ramsey Show Highlights - "We Are Drowning in Debt!"

Episode Details:

• Title: We Are Drowning in Debt!
• Host: Ramsey Network (Featuring Dave Ramsey and Jade Warshaw)
• Release Date: May 24, 2025
• Duration: Approximately 7 minutes

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1. Introduction and Caller’s Predicament

The episode begins with Dave Ramsey addressing a distressed caller who is contemplating selling their home due to overwhelming debt.

• Caller’s Opening Statement ([00:05]):

  "Today, me and my husband are thinking about selling our home because we're just drowning in debt and we just don't have any other option to try to get out of it but to sell our home."

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2. Detailed Debt Breakdown

Jade Warshaw prompts the caller to elaborate on the factors contributing to their financial strain.

• Jade’s Inquiry ([00:23]):

  "What is what has created that scenario where you don't believe you have any other options. Give us some details."

The caller provides a comprehensive list of debts:

• Automobile Loans:

  • Two cars with outstanding loans of $9,000 and $12,000, both being "negative equity," meaning selling the cars would not cover the remaining loan balances ([00:31] – [01:11]).

• Other Debts:

  • Personal loans totaling $20,000.
  • Credit card debt ranging from $35,000 to $40,000.
  • Husband’s student loans amounting to $73,000.
  • IRS debt of $9,500.
  • Medical bills totaling $3,000 ([01:11] – [01:41]).

Jade and Dave Ramsey work with the caller to map out the entire debt situation for clarity.

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3. Assessing Monthly Obligations

Dave Ramsey delves into the caller’s monthly financial commitments to understand the severity of their debt.

• Monthly Debt Payments:

  • Approximately $4,000 in debt payments alone ([01:46]).

• Mortgage Details:

  • Monthly mortgage payment: $3,100.
  • Original purchase price of the home: $386,000.
  • Current market value: Approximately $385,000 to $387,000 ([02:20] – [02:44]).

Jade’s Insight ([02:49]):

"Well, sweetheart, if you sell the house, that's not going to give you guys any much money at all."

Considering realtor fees, selling the home would barely offset the mortgage balance, offering minimal relief.

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4. Evaluating the Decision to Sell

The discussion shifts to the practicality and implications of selling the home.

• Caller’s Reason for Selling:
  • Husband’s lengthy commute of an hour and a half each way to his job, totaling three hours of driving daily on workdays ([03:07] – [04:07]).

Jade and Dave Ramsey weigh the pros and cons:

• Jade’s Recommendation ([03:53]):

  "I would consider moving Jade in this situation because that's a long way to commute, number one."

• Dave’s Analysis ([04:05] – [04:18]): Emphasizes the burden of the long commute and highlights that the primary reason to sell is the high percentage of income allocated to housing, which is over 25% of their take-home pay.

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5. Exploring Income Enhancement Strategies

Dave Ramsey encourages the couple to explore ways to increase their income to manage their debt effectively.

• Suggestions for Side Hustles ([04:18] – [06:34]):
  • Identifying reliable and consistent side jobs to supplement their incomes.
  • The husband currently has a part-time weekend job, while the caller attempts to work overtime at a daycare ([05:21] – [05:51]).

Dave emphasizes the need for dependable additional income streams:

"If I'm going to spend the extra hours working, I want something that's like clockwork. I can get it. I can go bust my butt and do it, and it's there." ([05:58])

He advises the couple to brainstorm potential side hustles that can provide steady extra income and incorporate them into their financial plan.

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6. Budgeting and Financial Discipline

The conversation shifts to budgeting as a critical tool for managing and eventually eliminating debt.

• Caller’s Budgeting Efforts ([06:34] – [06:43]): The caller mentions attempting to use the EveryDollar app but planning to cancel due to the cost:

  "I did like the free trial thing, but I'm going to have to cancel it because it's like $18 a month."

• Jade’s Advice ([06:43] – [07:07]):

  "Y' all need to stop borrowing money... Create your free every dollar budget today."

Dave reinforces the importance of strict budgeting:

"You can afford it. You spend more on pizza delivery. Okay. You can afford it."

He urges the couple to adopt a zero-based budgeting approach without relying on paid apps, emphasizing that all expenses must be accounted for meticulously to regain financial control.

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7. Actionable Steps and Conclusion

To conclude, Dave Ramsey and Jade Warshaw provide the caller with a clear action plan:

1. Increase Income:

   • Secure reliable side hustles for both spouses to ensure a steady stream of additional income.

2. Comprehensive Budgeting:

   • Utilize free budgeting tools or manual spreadsheets to track every dollar.
   • Eliminate unnecessary expenses and prioritize debt repayment.

3. Debt Reduction Strategy:

   • Focus on paying down high-interest debts first, such as credit cards and personal loans, while maintaining mortgage and essential payments.

4. Consider Housing Costs:

   • Evaluate the feasibility of selling the home based on financial benefits versus the emotional and logistical costs, such as reduced commute times.

5. Commit to Financial Discipline:

   • Avoid accruing new debt by adhering strictly to the budget and financial plan.

By following these steps, the couple can navigate out of their debt crisis without resorting to selling their home, thereby improving their financial stability and quality of life.

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Notable Quotes:

• Dave Ramsey ([02:20]):

  "You've got that big commute... it's still a lot. Three hours driving in a day is a lot to get to work."

• Jade Warshaw ([06:43]):

  "You y' all need to stop borrowing money."

• Dave Ramsey ([07:04]):

  "Create your free every dollar budget today."

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Conclusion:

In this episode of The Ramsey Show Highlights, Dave Ramsey and Jade Warshaw guide a couple overwhelmed by debt, exploring the impracticality of selling their home and instead focusing on increasing income, strict budgeting, and disciplined debt repayment strategies. The discussion underscores the importance of proactive financial management and provides actionable steps to overcome significant debt challenges.

Transcript

[Dave Ramsey]

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

[Caller]

Today, me and my husband are thinking about selling our home because we're just drowning in debt and we just don't have any other option to try to get out of it but to sell our home. So, yes, that's what is.

[Jade]

What is what has created that scenario where you don't believe you have any other options. Give us some details.

[Caller]

Well, we are just drowning in debt. And I know y' all, we sales say sell the cars. And we looked into it. We owe. In one of our cars, we owe like 9,000.

[Dave Ramsey]

Okay.

[Caller]

And we. We try to see if we could sell it, but we will be under. It's really not worth selling is this. I guess right now we just better. Better off paying it off. And the other one is 12,000. And that one as well is negative. So we're like, okay, we might as well just try to hang on to those and try to pay those off. And everything else is loans and credit cards, student loans.

[Dave Ramsey]

Go through the other ones. Go through the other amounts for us so we can get a picture of this. So the $9,000 car, the $12,000 car. What else?

[Caller]

And then loans, like personal loans, you know, like 20,000.

[Dave Ramsey]

Okay.

[Caller]

Credit cards is around like 35 to 35 to like 40,000.

[Dave Ramsey]

Okay.

[Caller]

Student loans is. My husband's is like 73,000.

[Dave Ramsey]

Okay. How much are yours?

[Caller]

I don't have any.

[Dave Ramsey]

Good.

[Caller]

And my real. The IRS is like 9500.

[Dave Ramsey]

Okay.

[Caller]

And then I have medical bills. That's like 3000.

[Dave Ramsey]

Okay. Okay.

[Jade]

What's your combined income?

[Caller]

Combined income is like 10,500 to like 11,000 per month. Yes.

[Dave Ramsey]

Okay. And have you added up? If you don't know, it's okay. But if I were to ask you on the spot, like, how much does this cost you in payments every month? Do you know the number to that?

[Caller]

Like, the debt alone is like 4,000, probably a little bit more.

[Dave Ramsey]

Okay. So you're paying 4,000 in payments. And. And then tell me what's your mortgage? Tell me about the mortgage. Tell me what you owe on it.

[Caller]

The mortgage. The mortgage is like 31. 3100.

[Dave Ramsey]

Okay. And that's what you're paying per month. But tell me how much you bought the house for?

[Caller]

The house? We bought it for 386.

[Jade]

And what do you.

[Dave Ramsey]

What's it worth right now?

[Caller]

It's worth like 385. 387.

[Jade]

Well, sweetheart, if you sell the house, that's not going to give you guys Any much money at all.

[Caller]

I know we owe 340 on it right now.

[Jade]

Right. But after you pay your realtor, there's very little of this that is going to actually solve this problem.

[Caller]

Right. That's what we were like, okay, should we just try to fight for it or should we try to sell it and try to at least get out of it?

[Jade]

Jade's got something to tell you.

[Caller]

I mean I was, we were thinking is because my husband drives like an hour and a half commute to his job.

[Dave Ramsey]

Okay, interesting.

[Caller]

So he wanted to move closer to his job because it's, it's a long drive.

[Jade]

For less money in that location. Sorry, Jake.

[Dave Ramsey]

That's okay.

[Caller]

The rent's probably going to be like 2,000.

[Dave Ramsey]

Yeah. Not much different. Well, no, you said you're paying 3,100 per month.

[Jade]

Oh yeah, that is, that is actually a huge difference.

[Caller]

3100 plus H, the HOA.

[Dave Ramsey]

Oh, that's not including HOA.

[Caller]

What's your HOA to 250 every quarter.

[Dave Ramsey]

Okay. Every quarter. Okay.

[Jade]

I would consider moving Jade in this situation because that's a long way to commute, number one.

[Dave Ramsey]

Well, there's a couple of things. You got that big commute I was going to ask you, is it an hour and a half each way or is that combined? Because if it's 40 minutes that's not as big of a deal.

[Caller]

But no, it's each way.

[Dave Ramsey]

Oh, girl.

[Jade]

Yeah, I definitely move into the office.

[Caller]

Three days out of the week. So two days he'll work from home, but three days out of the week he has to drive to the office.

[Dave Ramsey]

It's still a lot. Three hours driving in a day is a lot to get to work. So that's one, that's one green light. It's not the biggest reason because like you said, it's not like he's going in every day, but it is a reason. The biggest reason for me to consider getting out of this house is because it's, it's more than 25% of your take home pay and at this point you need every dollar that you can get your hands on. Now, right? There is a thought here and you guys need to sit and talk about this because there's a thought where I go, okay, if you guys really start side hustling, if you start picking up your income, there could be a world when this debt is over that this is not 20, that this is 25% of your take home. You see what I'm saying? That you raise your income and it becomes Something that you can keep around. Today, though, it's really a problem. So I would say your homework, to sit down with your spouse tonight would be to say, what are all the things we can do to make money? What are your opportunities that are directly related to your job and what are mine that are. Do you. Do you both work?

[Caller]

Yes, we both work. So he has his main job and then he has a part time job on the weekends to make like some extra income. I try to work overtime. I work at a. A daycare, so I try to work extra, like overtime whenever I can.

[Dave Ramsey]

How consistent can that happen? Is that like a daily thing or is it like a couple times a month?

[Caller]

It varies. It depends on the teachers. Like, I just found out I have Covid, so I have to be out all week.

[Dave Ramsey]

Got you. So what I'd be looking for, when I'm looking for a side hustle, I'm looking for something I can count on. That's the whole point.

[Caller]

So.

[Dave Ramsey]

So I'd be looking. If I'm going to spend the extra hours working, I want something that's like clockwork. I can get it. I can go bust my butt and do it, and it's there. So you both need that. Um, and then if something, if, you know, part time pops up at the. At the job and you have the. The leverage, you know, the place in your schedule to do it, you do that too. But right now, I want. Here's my. My main job and a go to side hustle that's always there. I can work it every day, every weekend. Got it. So that's you guys job to. To come up with that tonight. And then after that. Have you made a budget?

[Caller]

I tried the dollar thing I just downloaded.

[Dave Ramsey]

Okay, good.

[Caller]

I did like the free trial thing, but I'm going to have to cancel it because it's like $18 a month.

[Jade]

Okay, Y' all need to stop borrowing money.

[Dave Ramsey]

Yeah. You got to stop borrowing, right?

[Caller]

Yes.

[Jade]

Like you got in this mess because y' all are trying to do too much and you don't have enough money for it. So if you can't afford every dollar to get a budget, you better get it out on paper.

[Dave Ramsey]

You can afford it. You spend more on pizza delivery. Okay. You can afford it.

[Jade]

Create your free every dollar budget today.

[Dave Ramsey]

The simplest way to budget for your life.