We’re Almost $1M in Debt!

Summary

The Ramsey Show Highlights: Episode Summary

Episode Title: We’re Almost $1M in Debt!
Host: Ramsey Network
Release Date: December 8, 2024

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Introduction to Jeff's Financial Situation

In this episode, Jeff, a newly graduated dentist, shares his overwhelming financial predicament with host Dave Ramsey and co-host Jade Warshaw. Jeff and his fiancée find themselves burdened with nearly $1 million in debt, predominantly from student loans. With only a year into their dental practice, they are struggling to manage their finances effectively.

Notable Quote:

• Jeff [00:06]: "Yeah, me and my fiance, we're about a million dollars in debt right now, and we kind of [have] most of it student loan debt, but we still have a million dollars we just don't know how to really tackle."

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Analyzing the Debt Breakdown

Dave Ramsey delves into the specifics of Jeff's debt, highlighting the significant portion owed to student loans. Both Jeff and his fiancée have accumulated approximately $450,000 each in student loans, leaving them with limited additional debts.

Notable Quotes:

• Jeff [01:29]: "Let's see. 450,000 right now in all student loan."
• Jeff [01:37]: "We're both pretty good on that side."

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Challenges in the First Year of Practice

The discussion shifts to the challenges faced in the initial year of establishing a dental practice. Jeff mentions that despite their qualifications, there is a lack of business acumen taught during their education, leaving them unprepared for the financial realities of running a practice.

Notable Quotes:

• Dave Ramsey [01:56]: "They don't teach you how to run a business. They teach you how to take care of teeth."
• Jeff [01:49]: "About a year now. We just kind of. We just came out of school. It's just kind of a nervous thing to be a million dollars in debt just."

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Strategies for Business Growth and Debt Management

Dave Ramsey emphasizes the importance of connecting with successful dentists to gain insights into growing their practice. He recommends the Proximity Principle, encouraging Jeff to seek mentorship and practical advice from those who have successfully navigated similar financial challenges.

Notable Quotes:

• Dave Ramsey [03:00]: "You need to be in contact with successful dentists, and I mean successful. And I want you telling them I need your best advice."
• Dave Ramsey [03:20]: "Get all that feedback in one bucket and start doing it."

Jade Warshaw adds to the conversation by stressing the necessity of avoiding additional debt. She advises Jeff to focus on reducing living expenses and postponing major financial commitments like buying a home until their debt situation stabilizes.

Notable Quotes:

• Jade Warshaw [05:53]: "You're adding more debt to your name."
• Jade Warshaw [07:15]: "Please promise me. Your homework coming off this call is to promise me that you won't go into debt into this practice right now and that you will not buy a home right now, because that would add insult to injury."

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Living Expenses and Financial Discipline

The conversation highlights the high cost of living in areas like San Jose, where Jeff and his fiancée reside. Dave and Jade strongly advocate for extreme cost-cutting measures, such as finding more affordable housing, utilizing public transportation, and minimizing discretionary spending to free up funds for debt repayment.

Notable Quotes:

• Dave Ramsey [06:01]: "I don't want to add weight to you of having to replace an AC or having to replace a roof or having to do what I'm saying."
• Jade Warshaw [06:51]: "You need to be living as cheaply as possible."

They encourage adopting frugal habits, including recycling bags, packing lunches at home, and reducing transportation costs to manage their limited income more effectively.

Notable Quotes:

• Dave Ramsey [08:00]: "And I would prescribe a lot of... you can't even afford to buy cold cuts."
• Jade Warshaw [08:00]: "You eat Lean Cuisine and you drive a Ford Taurus."

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Actionable Steps and Final Advice

To conclude, Dave Ramsey and Jade Warshaw provide Jeff with a tangible action plan:

1. Connect with Successful Dentists: Seek mentorship and gather actionable strategies for business growth.
2. Avoid Additional Debt: Refrain from taking on more debt by delaying major purchases like home ownership.
3. Drastically Reduce Living Expenses: Implement stringent cost-cutting measures to free up income for debt repayment.
4. Adopt Frugal Living Practices: Embrace a minimalist lifestyle to ensure financial stability.

Dave Ramsey also humorously suggests implementing unconventional cost-saving measures, such as fasting for extended periods to reduce food expenses, underscoring the seriousness of their financial situation.

Notable Quotes:

• Dave Ramsey [07:34]: "I would prescribe a lot of fasting for this couple. It's the new... it's a biblical principle, and I think it’s got some financial advantages here."
• Jade Warshaw [07:15]: "Please promise me... you won't buy a home right now."

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Conclusion

This episode serves as a crucial reminder of the importance of financial literacy, especially for professionals entering high-debt fields like dentistry. Jeff's story underscores the need for comprehensive business training and proactive debt management strategies to achieve financial freedom.

Listeners are encouraged to apply the principles discussed—seeking mentorship, avoiding unnecessary debt, and rigorously managing living expenses—to navigate their own financial challenges successfully.

Final Notable Quote:

• Dave Ramsey [09:15]: "And broke. I mean, yikes. This is the Ramsey Show. Create your free EveryDollar budget today. The simplest way to budget for your life."

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Key Takeaways:

• Proactive Debt Management: Understanding and addressing debt early in one's career is crucial.
• Business Acumen: Beyond professional skills, business management knowledge is essential for success.
• Frugal Living: Reducing living expenses can significantly aid in managing and eliminating debt.
• Mentorship: Learning from those who have successfully navigated similar financial challenges can provide invaluable guidance.

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This summary encapsulates the core discussions, advice, and insights from the episode "We’re Almost $1M in Debt!" on The Ramsey Show Highlights, providing listeners and non-listeners alike with a comprehensive understanding of the episode's content.

Transcript

[Dave Ramsey]

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

[Jeff]

Yeah, me and my fiance, we're about a million dollars in debt right now, and we kind of most of it student loan debt, but we still have a million dollars we just don't know how to really tackle.

[Dave Ramsey]

My goodness.

[Jade]

Is this. What type of degrees did you guys have?

[Dave Ramsey]

Yeah, we're.

[Jeff]

We're both Dennis. So I guess that's a good thing. Kind of.

[Jade]

Yeah.

[Dave Ramsey]

Yeah. I can tell you're fired up by that. Bless your heart.

[Jeff]

Yes.

[Jade]

Are you making money? Like, what are you guys making every year?

[Jeff]

So what we're told when we go into this is we'll be able to pay it off. Don't worry.

[Jade]

That's right.

[Jeff]

We make about probably average 170 a year.

[Dave Ramsey]

That's what you guys are actually paying yourself?

[Jeff]

Yes, in our taxes before tax.

[Dave Ramsey]

Oh, my gosh, 170 gross. And are you separate practices?

[Jeff]

We are currently. But we are probably going to group in together and just try to grow, I guess.

[Jade]

Did you say 170 each or combined? Okay, okay.

[Dave Ramsey]

170 gross each. Was that.

[Jade]

And you're living in. Okay, well, San Jose is expensive. That's an expensive part of the country.

[Dave Ramsey]

What is your debt? Break it down for Jay. Let's go. You first. You're the one on the phone, and you're not married yet. So what's your debt about?

[Jeff]

Let's see. 450,000 right now in all student loan.

[Jade]

Okay. And no other debt, luckily.

[Jeff]

We're both pretty good on that side.

[Jade]

Okay. Pretty good or good?

[Jeff]

Good.

[Dave Ramsey]

How long. How long have you been. How long have you been practicing?

[Jeff]

About a year now. We just kind of. We just came out of school. It's just kind of a nervous thing to be a million dollars in debt just.

[Dave Ramsey]

And how. No, no, listen, brother, this is real. And I. Oh, this makes me so mad on your behalf. Not mad at you, but. But people are just selling this, and now you're facing it. It's like staring down the barrel of a gun right now. I can feel it all over you. And. Well, here's the thing I'm asking about. You're only a year into this based on. I don't know if they teach you any business skills. Probably not. But do you have any.

[Jeff]

They don't.

[Dave Ramsey]

They don't Any sense of. Of. Of how big your practice is in its first year? Are you small for first year? Are you medium size? You have any sense of that?

[Jeff]

That's. I would say we're probably small. Getting to Medium, hopefully, by the end of this. By the end of this bill.

[Dave Ramsey]

So you know any dentists at all that are very successful, huh?

[Jeff]

Yes, I do.

[Dave Ramsey]

Are you in contact with them on a regular basis? To go, how did you grow your business?

[Jeff]

No.

[Dave Ramsey]

You need to be.

[Jeff]

I'm not.

[Dave Ramsey]

You need to be. I'm not kidding you. Jay's gonna give you some financial advice. But I was leading you this because let me tell you something. They don't teach you how to run a business. They teach you how to take care of teeth. But taking care of teeth is not enough to be a successful dentist. You have got to know how to get people in the chair.

[Jade]

Yeah, that's right.

[Dave Ramsey]

And I want you on the phone. I'm going to give you, as a gift of mine, Christian, at the end of this call, I want to give him the proximity principle. It's worth a quick read. You get the audiobook if you want that. We'll give you whatever version you want. But I want you to be in touch with successful dentists, and I mean successful. And I want you telling them I need your best advice. What would you say to me, where I'm at right now about growing my business, and try to replicate this with two or three other successful dentists? Get all that feedback in one bucket and start doing it. Because the quicker you grow this business, the more you can pay yourself. And the more you pay yourself, the easier it is to do what Jade's going to tell you. I just wanted to give you that. You've got to be like. And she's got to be the same way. If you guys combine practices, this can't be like we were married. And we have to know. You both are. Like, you're the most. I don't want to say desperate dentist we've ever seen, but it's like, you got to get creative in the community and be competitive so that everybody's coming to you to get their teeth cleaned.

[Jade]

Okay, Can I ask a question? And this is both to Ken and you, Jeff. So you come out of dental school, you've got all the goods to be able to practice. Are you working for someone else or you started your own thing?

[Jeff]

I'm working for someone else, but we're working on a contract to hopefully partner. Ideally.

[Jade]

Is that going to cause you to have to go into more debt? Because that's what I. I'm trying to get a sense of what your next plan is, because I don't want you to go into more debt.

[Jeff]

And that's why we're Trying to hold off because we're paying more debt.

[Dave Ramsey]

No, you can't.

[Jeff]

You got to.

[Dave Ramsey]

No, you got to do your own practice, man. I thought that's what we were talking about. You can't go into debt. It's not worth it.

[Jade]

No, like, you got. You got. You got to work for someone else until you can afford to do whatever the next step is.

[Dave Ramsey]

Is your income fixed, though, after all that big speech I gave? Is your income fixed, or are you able to go recruit new patients and get some of that?

[Jeff]

No, not fixed.

[Dave Ramsey]

So you can. So you can benefit from hustling like I told you to do?

[Jeff]

Yes.

[Dave Ramsey]

All right. Okay. That's good news.

[Jade]

That's all I was trying to get at. And I don't want you to go into any more debt until this is cleaned up, because, again, you're. What you're realizing now is true. Yes, you have agency over this, but there's no guarantees. And there's no guarantees at how quickly this will go. And so going into further debt, I would not advise that looking at the numbers. The hard part for me is you are in an expensive area. What are you paying? Like, what's the. What's the housing situation? Are you renting? Do you own a place? What is it?

[Jeff]

We're gonna. We're gonna be owners. Cause it doesn't. It almost doesn't make sense to rent. Cause then we're just throwing that. That's not true from the math.

[Jade]

What are you doing right now? What's the situation now?

[Jeff]

About 4,500amonth for your place, or are.

[Jade]

You guys together already?

[Jeff]

Together you're already. It'll be 4,500. Yep. Okay to rent, but to buy, it's the same.

[Jade]

Yes, but you're going into debt to get it. You're adding more debt to your name.

[Jeff]

We will be, yes.

[Jade]

And you're tied to that. Like you. You gotta pay it. And now you're adding expenses to your life as well. You can't afford to do that. You need to be living as cheaply as possible. And if it's the same price per month, it's not really the same price because your complex or whatever is paying for yard and garbage and all those things. So I don't want to add weight to you of having to replace an AC or having to replace a roof or having to do what I'm saying.

[Jeff]

Yeah.

[Jade]

So that's. Or adding insurance. You know, all that stuff is really expensive. And so I would continue to rent. You're not throwing money down the drain. You are buying yourself time until you can truly afford to buy. So please promise me. Your homework coming off this call is to promise me that you won't go into debt into this practice right now and that you will not buy a home right now, because that would add insult to injury.

[Dave Ramsey]

And I'm going to throw in here, I'm going to challenge you to get a much, much better rent situation. Just try find a place over an old lady's garage. I say that all the time, but I'm telling you, I don't think you should. Guys should be paying anywhere near 4,500amonth. Not now. You guys are so broke. Yeah, you need to be. You almost need to be staying in a place where they're paying you.

[Jade]

Jeff, you're going to have to fight. Jeff, you're going to have to fight hard. Because the truth is, you guys have got these shiny degrees. You're in a great profession where there's the potential to make a lot of money. And the people around you, probably the people that you're working with, they're coming in with their Tahoes and their Cadillacs and their Teslas and they get expensive salads and juices for lunch. You don't do that. You eat Lean Cuisine and you drive a Ford Taurus.

[Dave Ramsey]

And I. I would prescribe a lot of. I would prescribe a lot of fasting for this couple. It's the new. It's the new craze. It's a biblical principle, and I think it's got some financial advantages here. Y'all need to try fasting three days at a time. You're going to look great, but you can't even afford to buy cold cuts.

[Jeff]

Yeah.

[Jade]

Carl Budding, do you remember? I don't know. Listen, Jeff, I don't know if you remember when I was coming up. Yeah, the cheapest cold cuts you could.

[Dave Ramsey]

Buy were older than these youngsters. But in all seriousness, Jeff, listen, you have got to reduce your living expenses right now. That's one of the biggest raises that you could give yourself. So I'd be. As soon as this rental term is up or whatever's going on, I would be looking to slash those costs. I mean, big time. Even if I got a driveways, at this point, I'd rather pay gas. You know, y'all ride together. It's called public transportation. Everything's on the table now, right, Jay?

[Jade]

Everything. You get you a bus pass. It's on and popping.

[Dave Ramsey]

It's the truth, man. It's like. And by the way, you're brown bagging it, and you're recycling the bag. Do you know what I mean? That thing's gonna be all crinkled out.

[Jade]

You rinse out the Ziploc bag, and you gotta dry it out and use it again.

[Dave Ramsey]

Yeah, like y'all put the.

[Jade]

Whoa.

[Dave Ramsey]

And broke. I mean, yikes. This is the Ramsay Show. Create your free every dollar budget today. The simplest way to budget for your life.