Summary of "We Make $60,000 and Are Struggling Every Month" | The Ramsey Show Highlights

Release Date: February 22, 2025
Host: Ramsey Network
Guests: Zach and John

I. Introduction to Zach's Financial Struggles

In this episode, Zach reaches out to The Ramsey Show seeking help with his family's financial predicament. With a combined household income of approximately $60,000, Zach and his wife are grappling with mounting debts that leave them struggling to make ends meet each month.

Zach [00:04]: "I'm trying to figure out how to budget my money to get out of debt."

II. Detailed Overview of Debt and Income

Zach provides a comprehensive list of his debts, detailing both amounts owed and their respective nature. This overview sets the stage for Dave Ramsey's strategic advice.

• Debts:

  • House Mortgage: $150,000
  • Truck: $12,000
  • Wife's Car: $3,000
  • Student Loan: $2,000
  • Credit Cards: $1,701 and $600

• Income:

  • Combined Annual Income: $60,000
  • Zach's Income: Approximately $35,000 ($17/hour as a water plant operator)
  • Wife's Income: Approximately $15,500 (courthouse employee)

Dave Ramsey [00:16]: "Okay, tell us a little bit more. What's the debt?"

Zach [01:03]: "Roughly 60,000."

Dave Ramsey [02:11]: "Do you have any cash outside of your checking account at all?"

III. Asset Evaluation

Zach outlines his current assets, which include the value of his truck and his wife's car, both of which have depreciated significantly since purchase. This assessment is crucial for identifying potential assets to liquidate in order to reduce debt.

• Truck:

  • Value: $25,000 (private sale)
  • Debt Owed: $12,000

• Wife's Car:

  • Value: $6,000
  • Debt Owed: $3,000

Dave Ramsey [01:15]: "That's great news."

Zach [01:22]: "About six."

IV. Debt Elimination Strategies

Dave Ramsey, along with guest John, proposes a multi-faceted approach to eliminate debt:

1. Sell the Truck: By selling the truck for $25,000, Zach can pay off the $12,000 debt, freeing up $13,000.
2. Purchase a Cheaper Truck: Recommend buying a $5,000 truck to reduce monthly expenses.
3. Redirect Funds:
   • Use $8,000 from the truck sale to eliminate the wife's car payment of $3,000.
   • Pay off the $2,000 student loan.
   • Allocate the remaining $5,000 towards settling credit card debts totaling $1,300 and bolstering emergency savings.

Dave Ramsey [04:06]: "I think you can get rid of it all if I did the math right. I think you pay all of your entire debt off with the proceeds from the truck, brother, you're free."

John [04:22]: "Then I'm putting the rest of it in a savings account. It's going to be in my emergency fund because I'm about to have a little baby in my house."

V. Refinancing and Income Enhancement

Recognizing the high interest rate on Zach's mortgage (approximately 8%), Dave and John advise refinancing to secure a lower rate, thereby reducing the monthly mortgage payment of $1,200. Additionally, they emphasize the importance of increasing household income.

Dave Ramsey [03:26]: "Call my friends at Churchill Mortgage...see about a refinance in that house."

John [06:21]: "Call Churchill and get this house refinanced. That's number two."

Increasing Income:

• Zach's Employment:

  • Zach is unlicensed but expects to obtain his license in April, anticipating a pay raise.
  • Currently working 16-hour shifts, four days a week, and taking on odd jobs.

• Wife's Employment:

  • On maternity leave for six weeks with paid leave, post which household income may decrease by half temporarily.

Dave Ramsey [07:00]: "Good man. But let's go get the best hourly rate we can right now. I don't care what it is."

John [07:08]: "Let's go get a certification or change field so that in two years you're doubling your salary."

VI. Recommendations and Action Steps

Dave and John lay out clear, actionable steps for Zach to achieve financial stability:

1. Asset Liquidation:

   • Sell the truck immediately to eliminate major debts.

2. Refinance Mortgage:

   • Contact Churchill Mortgage to secure a lower interest rate.

3. Increase Income:

   • Zach should seek the highest possible hourly rate, even if it means taking temporary, higher-effort jobs.
   • Consider certifications or transitioning to trades for long-term salary increases.

4. Build Emergency Fund:

   • Use the remaining funds from the truck sale to establish an emergency fund, crucial with a baby on the way.

Dave Ramsey [06:43]: "Get it, brother."

John [07:12]: "I'd like you to start thinking about the trades."

VII. Final Thoughts and Encouragement

Dave Ramsey and John conclude the discussion by reinforcing the feasibility of Zach's debt elimination plan. They emphasize the importance of immediate action, disciplined budgeting, and strategic income enhancement to navigate the financial challenges ahead.

Dave Ramsey [08:06]: "Get after it. My man."

Zach [08:15]: "The simplest way to budget for your life."

Key Takeaways:

• Prioritize Debt Repayment: Focus on eliminating high-interest debts first, starting with the largest liabilities.
• Asset Management: Liquidate non-essential assets to free up funds for debt repayment and build an emergency fund.
• Income Diversification: Seek additional income sources and consider career advancements or transitions for better financial stability.
• Budgeting Discipline: Implement a strict budgeting plan to ensure that every dollar is accounted for and allocated towards debt reduction and savings.

This episode serves as a comprehensive guide for families earning around $60,000 who find themselves struggling each month, offering practical steps to regain financial control and build a secure future.