We Dialed Back But Are Still Struggling

Summary

Podcast Summary: "We Dialed Back But Are Still Struggling" The Ramsey Show Highlights
Release Date: December 29, 2024

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Introduction

In the episode titled "We Dialed Back But Are Still Struggling," The Ramsey Show Highlights delves into the financial challenges faced by Amber and her husband. Despite making significant efforts to reduce their debt, the couple continues to grapple with substantial financial burdens. Hosted by the Ramsey Network, this episode features insights from financial expert Dave Ramsey and his colleague Ken Coleman, offering practical advice and strategies to help listeners overcome similar struggles.

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Listener Background: Amber's Financial Situation

Amber, a registered nurse (RN) aged 34, reached out to the show to discuss her family's financial predicament. She and her husband, aged 35, are burdened with a total debt of approximately $49,600, excluding their mortgage of $128,000 at a 6.125% interest rate. Amber has been proactive, working extra hours since August to pay down their debt, managing to eliminate nearly $5,000. However, this relentless effort has taken a toll on their personal lives, leading Amber to express concerns about balancing debt repayment with family time.

Key Details:

• Household Income: Approximately $150,000 annually before expenses, with a monthly take-home of $8,500 to $8,800 when Amber works extra hours.
• Debt Breakdown:
  • $5,600 personal loan at 13.95%
  • $20,000 car loan at 13.95%
  • $12,000 remaining on the car loan at 8%
  • $7,000 in student loans at around 4%
  • Credit card debt from her 20s

Amber emphasizes her commitment to eliminating debt, noting, "I can't do this forever, you know, I miss my kids, I miss my husband" (00:49). Her ultimate goal is to secure a stable retirement and ensure her daughter's future is not marred by financial worries.

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Dave Ramsey's Initial Advice

Dave Ramsey responds by prioritizing debt elimination over retirement savings. He advises Amber to temporarily halt contributions to retirement accounts to focus all available resources on debt repayment. Ramsey states, "The best way to be able to retire with dignity is to get the debt cleared. So you need to stop putting money in retirement temporarily" (01:33).

He further assesses the household income and debt situation, highlighting the significant burden of the car loan. Ramsey suggests selling the $20,000 car to eliminate high-interest debt, asserting, "It doesn't require a twenty thousand dollar car to do a 30 minute commute. Requires a $5,000 car" (04:17). This move would free up funds to accelerate debt repayment.

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Ken Coleman's Supplementary Guidance

Ken Coleman reinforces Dave Ramsey's recommendations, emphasizing the importance of a detailed budget. He urges Amber to "put real pen to paper right now before you do anything else today and run those numbers" (05:48). Coleman suggests calculating the impact of selling the car and reallocating those funds towards debt reduction. He emphasizes the effectiveness of strict budgeting, stating, "If we sold the car and we bought a $5,000 car, what is that monthly raise we just got to put towards debt" (05:48).

Coleman also highlights the psychological aspect of financial management, noting, "Once you see how you're going to get there, you're going to be energized and there'll be no stopping you. That's called hope" (06:30). He encourages Amber and her husband to fully commit to the debt repayment plan, assuring them that structured financial planning can rekindle hope and motivation.

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Comprehensive Debt Repayment Strategy

The episode outlines a multi-faceted approach to debt elimination:

1. Sell High-Interest Assets:

   • Action: Sell the $20,000 car.
   • Benefit: Eliminates a significant portion of high-interest debt (13.95%) and reduces monthly obligations.
   • Quote: "Sell it. If you had rid of that 14% interest rate... you're going to see these numbers start to flip for you" - Dave Ramsey (04:01).

2. Pause Retirement Contributions:

   • Action: Temporarily halt contributions to retirement accounts.
   • Benefit: Redirect funds towards debt repayment to accelerate elimination.
   • Quote: "Use all that money to help clear this debt. That's a temporary thing because I want you to clear the debt fast so you can get back to having, breathing again, a normal life" - Dave Ramsey (01:41).

3. Implement an EveryDollar Budget:

   • Action: Adopt Dave Ramsey's EveryDollar budgeting tool.
   • Benefit: Provides a clear and accountable framework for managing finances.
   • Quote: "Create your free every dollar budget today. The simplest way to budget for your life."

4. Maximize Income and Minimize Expenses:

   • Action: Continue working extra hours where possible; scrutinize and reduce discretionary spending.
   • Benefit: Increases available funds for debt repayment while maintaining necessary expenses.
   • Quote: "We're not going out to eat, we're not going on vacation. Don't see the inside of a restaurant unless you're working there as your second job." - Dave Ramsey (04:46).

5. Engage in Financial Education:

   • Action: Participate in Financial Peace University and utilize budgeting tools.
   • Benefit: Enhances financial literacy, enabling better decision-making and long-term financial health.
   • Quote: "We're going to make it. We're going to make it. We're going to make it. We're going to do this. We're going to do this."

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Conclusion and Encouragement

Dave Ramsey and Ken Coleman conclude the episode by expressing confidence in Amber and her husband's ability to overcome their financial challenges. They reiterate the importance of dedication, structured budgeting, and the elimination of high-interest debt as critical steps toward financial freedom. Ramsey emphasizes the transformative power of hope, stating, "Once you see how you're going to get there, you're going to be energized and there'll be no stopping you. That's called hope. Power of hope." (06:22)

The hosts assure listeners that with commitment and strategic financial planning, it is possible to transition from struggling with debt to achieving financial peace. They encourage other listeners in similar situations to adopt these strategies, fostering a sense of community and shared purpose in the journey toward debt-free living.

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Notable Quotes

• "The best way to be able to retire with dignity is to get the debt cleared. So you need to stop putting money in retirement temporarily." – Dave Ramsey (01:33)

• "It doesn't require a twenty thousand dollar car to do a 30 minute commute. Requires a $5,000 car." – Dave Ramsey (04:17)

• "If we sold the car and we bought a $5,000 car, what is that monthly raise we just got to put towards debt." – Ken Coleman (05:48)

• "Once you see how you're going to get there, you're going to be energized and there'll be no stopping you. That's called hope." – Dave Ramsey (06:30)

• "Create your free every dollar budget today. The simplest way to budget for your life." – Dave Ramsey (06:53)

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Final Thoughts

"We Dialed Back But Are Still Struggling" serves as a poignant reminder that even with significant income and dedicated effort, managing debt requires strategic planning and disciplined execution. Amber's story exemplifies the challenges many face, and the episode provides actionable solutions grounded in Dave Ramsey's proven financial principles. Listeners are encouraged to assess their own financial situations, adopt the recommended strategies, and remain hopeful and committed to achieving financial stability.

Transcript

[Dave Ramsey]

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

[Amber]

So me and my husband, we're 34 and we're 35. We don't have much of a retirement. He's got 13,000. I just started mine last paycheck, so I have $400 in there. We have about $49,600 worth of debt, and that includes everything except for our mortgage, which is $128,000 left. Not terrible, but it's at 6.125%. I've been. I have been. I'm an RN, so I'm able to work extra, and I've been working extra since August, and we've been able to pay off just under $5,000 worth of debt, which is great, but I can't do this forever, you know, I miss my kids, I miss my husband. So that 49,600 that I'm kind of laser focused on to get rid of. And we've dialed back, or I feel like we've dialed back everything that we can as far as financially or, you know, monthly. I'm just not sure how to get ahead because our goals are obviously to get out of debt. But I also am really concerned about retirement age, which I know is in roughly 30 years. But I don't want my daughter to ever have to worry about what's, you know, worry about me whenever I'm older. I want her to be able to live her life.

[Dave Ramsey]

The best way to be able to retire with dignity is to get the debt cleared. So you need to stop putting money in retirement temporarily.

[Amber]

Okay.

[Dave Ramsey]

And use all that money to help clear this debt. That's a temporary thing because I want you to clear the debt fast so you can get back to having, breathing again, a normal life. What's your household income?

[Amber]

While I'm working extra, we bring home about 8,500 to 8,800. It kind of depends on RN. It's, you know, funny, our shift differential.

[Dave Ramsey]

What's your husband?

[Amber]

Huh? He's in, like, a investigator HR position. He doesn't have a degree or anything, but he makes 73k a year. But he also has to pay 12,000 a year in child support, so whatever that is. So 73,000 minus 12,000 is what we make.

[Dave Ramsey]

Okay. And so you're making about the same. You're making about 70 or so.

[Amber]

Well, when I don't. When I'm working just normal and I'm not working extra, I bring home about 4,000amonth.

[Dave Ramsey]

Yeah, I'm not talking about bring Home I'm talking about your total household income is probably about 150 to get home with 8,500. Does that sound right?

[Amber]

Yeah, this one's about right.

[Dave Ramsey]

Yeah.

[Amber]

Around 80.

[Dave Ramsey]

What's the 50,000 in debt on?

[Amber]

I have a $5,600 personal loan that's at 13.95%. That was like a loan to pay off.

[Dave Ramsey]

What else?

[Amber]

Credit card from my 20s.

[Dave Ramsey]

What else?

[Amber]

And that behavior is fixed. Like I'm not going to run up any debt. In fact I've used credit cards to repair my credit.

[Dave Ramsey]

What else?

[Amber]

We have a $20,000 car that has 13.95% interest. 12,000 left on my car that has 8%. And then I have about $7,000 in school loans and it has varying, but they're all around 4%.

[Dave Ramsey]

Okay.

[Amber]

And then our home, of course, 128.

[Dave Ramsey]

Year old's credit is bad. And you got screwed when you bought that $20,000 car.

[Amber]

Yeah, yeah. At that time I had not repaired my credit.

[Dave Ramsey]

Doesn't matter. You got screwed. You have a high interest rate and half of your debt is one car.

[Amber]

Yeah, that's true, isn't it?

[Dave Ramsey]

Yeah. Sell it.

[Amber]

I don't know if we can. He has a about a 30 minute commute Monday through Friday.

[Dave Ramsey]

Doesn't require a third. It doesn't require a twenty thousand dollar car to do a 30 minute commute. Requires a $5,000 car.

[Amber]

Okay.

[Dave Ramsey]

If you had rid of that 14% interest rate, 1385 on a car you couldn't afford and shouldn't have bought and it's half of your debt and you quit putting money into retirement, you're going to see these numbers start to flip for you, kiddo. It's going to start to work. And he's not looking at this with you. You're doing it by yourself, right?

[Amber]

Oh no, no, no. We are both very involved. I think we both just lack that kind of deep financial literacy.

[Dave Ramsey]

Good, good. Okay. Yeah. If you sell the car and you stop the other retirement temporarily and you get detailed on your every dollar budget and both of you are looking at that every dollar budget and beating the snot out of it. I'm making every. We're not going out to eat, we're not going on vacation. Don't see the inside of a restaurant unless you're working there as your second job. And does he need a second job? Probably you're working one and temporarily. Let's get this stuff knocked out and let's see how fast I can pay off $30,000 or $25,000 worth of debt, making $150,000 a year really fast.

[Amber]

Yeah. I don't know if he could get a second job. He doesn't get home till 6pm most days, and on the weekends he has his son who. Special needs.

[Dave Ramsey]

All right.

[Amber]

But I. But that's the beauty and the blessing of the career I chose, is I'm able to.

[Dave Ramsey]

Yeah.

[Ken]

Amber, I want to make sure you're grasping the numbers that Dave is giving you.

[Dave Ramsey]

Okay.

[Ken]

If you remove the car payment plus the actual debt on the car, just what you guys have paid off since August, it's roughly four months. You've paid off $5,000. You got to listen to what Dave said and put real pen to paper right now. Like, sit down right now before you do anything else today and run those numbers. If we sold the car and we bought a $5,000 car, what is that monthly raise we just got to put towards debt. I don't think. I don't think those numbers have clicked for you, and that's okay. I would run those numbers in a real budget. I think you're going to be shocked how quickly you're going to pay that debt off, and then you're back to retirement.

[Dave Ramsey]

Here's what's interesting, is you're tired and you find all these reasons things can't happen. That's right. Because you don't see how you're going to get there.

[Ken]

That's exactly.

[Dave Ramsey]

Once you see how you're going to get there, you're going to be energ and there'll be no stopping you. That's called hope. Power of hope. It's very powerful. And sometimes hope is literally the result of a mathematical equation, what Ken's telling you. And so let's do that. Hang on. I'm gonna put you and your husband through Financial Peace University and put you into every dollar and get you guys going, because you guys need to sit down. It sounds like you're like 80% of the way there. You're both on board, which is excellent. Really glad to hear that he's carrying this with you. That's amazing. That's very good. You're willing to work extra. That's amazing. You've identified that. I want to get rid of the debt. That's amazing. So you've got all the parts there. All I'm doing is helping you polish the rough edges off of what you were looking at. And I think that's going to cause the ball to roll, and then the hope's going to kick in. And weird stuff starts happening when you start seeing a way, then you just push your foot to ride down on that accelerator and you bust it. You bust it. We're going to make it. We're going to make it. We're going to make it. We're going to do this. We're going to do this. Get it, get it, get it. Create your free every dollar budget today. The simplest way to budget for your life.