"Where The Flip Are You People Spending Money?"

Summary

Summary of "Where The Flip Are You People Spending Money?" Episode of The Ramsey Show Highlights

Release Date: April 9, 2025
Host: Ramsey Network
Episode Title: "Where The Flip Are You People Spending Money?"

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Introduction

In the April 9, 2025 episode titled "Where The Flip Are You People Spending Money?" of The Ramsey Show Highlights, host Dave Ramsey addresses a listener's struggle with managing debt despite a substantial household income. The episode delves into the pitfalls of high earnings coupled with poor spending habits, highlighting the importance of budgeting and financial discipline.

Caller’s Financial Predicament

The episode opens with a caller seeking advice on managing and eliminating significant debt. The caller shares that she and her husband, both engineers, are grappling with approximately $119,000 in debt. Their financial burden has slightly decreased from $160,000 over the past year, primarily due to unexpected expenses related to their first home. The breakdown of their debt is as follows:

• $55,000 in credit card debt
• $20,000 - $22,000 in student loans
• $23,000 in a personal loan
• $19,000 on a car loan

Additionally, their monthly house payment is close to $5,000, amounting to $60,000 annually.

Dave Ramsey’s Assessment and Critique

Dave Ramsey critiques the caller’s financial strategy, emphasizing that their high income of $300,000 is not translating into financial stability due to excessive spending. He states:

"You don't have an income problem. You have a spending problem." [03:56]

Ramsey highlights the disparity between their earnings and expenditures, pointing out that living on $200,000 instead of their current spending could eliminate their debt within a little over a year. He challenges the caller's perception of wealth, asserting:

"I want you to quit acting like you're rich because you're freaking broke." [03:51]

He underscores the importance of budgeting and financial control, urging the couple to allocate $8,000 per month towards debt repayment. Ramsey emphasizes that lifestyle choices, such as vacations and dining out, are detrimental to their financial health.

Underlying Issues: Burnout and Spending Habits

The caller acknowledges feeling burnt out from demanding jobs and long commutes, which have led to indulgent spending as a means of coping. Despite their high income and professional success, Ramsey identifies a fundamental issue:

"You're too smart. Too smart people. And So I drive 140 miles each way and I'm burn out. But I'm gonna start a side business. Right?" [04:03]

Ramsey argues that borrowing more to pay off existing debt is not a viable solution, as it perpetuates the cycle of debt without addressing the underlying spending habits.

Ken Coleman’s Perspective

Ken Coleman joins the conversation, reinforcing Ramsey’s sentiments by advising against unsustainable job commitments and excessive commuting:

"No, don't drive 140 miles. Get a different job, your life or change your job or move. Get rid of this house you can't afford. It's killing you." [05:44]

Coleman draws an analogy to old cartoons depicting characters struggling to keep multiple plates spinning, illustrating the futility of trying to balance overwhelming responsibilities without proper financial management. He emphasizes that merely balancing expenses doesn't equate to affording them, leading to inevitable burnout and financial instability.

The Importance of Net Worth Over Income

Ramsey reiterates a crucial financial principle derived from Tom Stanley’s Millionaire Next Door:

"Income does not mean wealth. Net worth means wealth. Net worth comes from living on less than your income. That's where it comes from." [07:20]

He stresses that true wealth is measured by net worth, not income, and achieving financial security requires disciplined spending and saving practices.

Conclusion: Emphasizing Financial Responsibility

The episode concludes with Ramsey and Coleman emphasizing the necessity of taking personal responsibility for financial habits. Ramsey passionately urges listeners to confront their spending behaviors and implement effective budgeting strategies to achieve financial freedom:

"You cannot borrow your way out of debt. Because let me tell you what happens when people do debt consolidation loans. It's a con... You could do so much good. You're smart people. You're not dumb people. But boy, you're doing some dumb butt stuff. And you got to change that, kiddo." [05:56 - 09:00]

Ramsey and Coleman collectively advocate for living below one’s means, eliminating unnecessary expenses, and building a robust net worth as the path to true wealth and financial well-being.

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Key Takeaways

1. High Income ≠ Financial Stability: Earning a substantial income does not guarantee financial health if accompanied by irresponsible spending habits.

2. Budgeting is Crucial: Implementing a strict budget and adhering to it can significantly reduce and eliminate debt.

3. Net Worth Over Income: Building wealth is about increasing net worth by saving and investing wisely, not just earning a high income.

4. Address Underlying Issues: Burnout and stress can lead to poor financial decisions; addressing these can aid in better financial management.

5. Avoid Borrowing to Solve Debt: Taking on additional loans to pay off existing debt is a temporary fix that perpetuates financial problems without resolving the root causes.

This episode serves as a poignant reminder that financial success is not solely determined by income but by how effectively one manages and allocates their resources.

Transcript

[Caller]

Brought to you by chm, a biblically based alternative to health insurance. Learn [e-mail] budget so my question is about paying off the debt that my husband and I have. We have about $119,000 in debt, and we're considering taking out either like a second or home equity loan to pay it off because we're getting impatient. It used to be 160, so we've been making progress.

[Dave Ramsey]

But that's good.

[Caller]

It's kind of. What.

[Dave Ramsey]

What's your. What's your household income?

[Caller]

Having children, about 300.

[Dave Ramsey]

Okay. You make $300,000 a year, and you've paid off $50,000 in debt when.

[Caller]

It'S probably taken us about a year. It's because we're in, like, our first home and there been, like, one thing after another, unexpected issues and things. My husband had to end up selling his car so that we can pay off some contractors from a leak we had. And then some of that went towards the debt. But also during this time, I've started a little side business, a little party business. I had my first customer this past weekend. My husband also takes on, like, extra. I don't want to call them shifts, but he volunteers for like.

[Dave Ramsey]

So what is the debt? What is the 119 on what kind of debt?

[Caller]

55 is credit cards, 20, 22 is student loans, 23 is a personal loan, and then 19 is my car.

[Dave Ramsey]

Okay, all right. What do you do for a living?

[Caller]

We're both engineers.

[Dave Ramsey]

Okay, all right, good. And how long have you been married?

[Caller]

Seven years.

[Dave Ramsey]

When did you buy this house you're talking about that's eating you alive?

[Caller]

20, 21.

[Dave Ramsey]

How much is your house payment?

[Caller]

Close to $5,000. Yes.

[Dave Ramsey]

Okay. All right. All right. Okay. So it takes $60,000 a year to pay your house payment. All right. So if you were to live on $200,000, you would be debt free in a little over a year. Kind of sounds absurd when I say it that way, doesn't it? Where the flip Are you people spending money?

[Caller]

Yeah, that's. There's just been like, we had to get a new ac, we had to get a new furnace. We didn't have a fence around the property.

[Dave Ramsey]

Oh, darn.

[Caller]

Not gonna lie. There have been some vacations in there, too.

[Dave Ramsey]

Yeah, some vacations. You eat out every night. You gotta spend like you're in Congress. Your lifestyle is eating you alive somewhere. It's not a. I mean, a furnace doesn't throw this thing off as far as it's off. We're off $100,000 a year. I mean people in Los Angeles can live on 200,000. They do it all the time. They live on 100,000 in Los Angeles. But people. So if you were to live on 200,000 and you put 100,000. So I want you to put $8,000 a month towards your debt. I want you to sit down tonight and I want you to sit down tonight and I want you to quit acting like you're rich because you're freaking broke. You're broke people that make 300 grand.

[Caller]

That's why we sold the other car and I started up a business.

[Dave Ramsey]

The business is not. You don't have an income problem. You have a spending problem. You make $300,000 a year.

[Caller]

That's fair. Yeah, I think there's like an issue with like feeling so burnt out that we end up needing like treat yourself, you know, vacation.

[Dave Ramsey]

What do you burn out from?

[Caller]

I drive 140 miles round trip to work and we have pretty taxing jobs and you know, we didn't get any help from, from parents. We paid for our own wedding.

[Dave Ramsey]

I don't think I can help you. I don't think I can help you. The answer to your question though is no, you should not borrow. Try to borrow your way out of debt. You did not pay off your debt when you move it over to the home equity loan. You just moved it and you left all the same habits and stupid butt spending in place and you're going to be right back into a mess again because you rationalize every time I bring up you've got some kind of dadgum excuse. Okay? And so you're going to have to decide that I make $300,000 a year and it's in embarrassing that I can't pay off 100 grand in a year. It's embarrassing when you decide that then I can help you because it should be embarrassing. I'm embarrassed for you. It's awful. So you know, you could clean this up in no time. And by the way, engineers is the number one career field that becomes millionaires. And they don't become millionaires doing what you guys are doing. I mean, you're too smart. Too smart people. And So I drive 140 miles each way and I'm burn out. But I'm gonna start a side business. Right? That's just.

[Ken Coleman]

No, don't drive 140 miles. Get a different job, your life or.

[Dave Ramsey]

Change your job or move. Get rid of this house you can't afford. It's killing You. Yeah. So, I mean, you guys really need to look at this and get. Because you're just. You're trying to find an easy way through this. And you gotta deal with the person in the mirror. And I love you and I want you to win. And you have such potential. Can you imagine what it'd be like to have a budget that was under control, making 30, making 300,000, $25,000 a month with a $5,000 house payment? How freaking rich you will be if you have no payments? And you learn to live on less than you make with a budget? And you and your husband are in control. You guys are out of control. You're chaotic. God, I mean, it's. You can do this. It's so clear. But no, no, you cannot borrow your way out of debt. Because let me tell you what happens when people do debt consolidation loans. It's a con. Because you don't change a person in your mirror. Your habits are still there. You're going to go right back into debt. And now you got a debt on your house and all new credit card debt, because we're right back where we were because we never got control of $300,000 worth of income. There are people out there listening right now that make 60,000 that are yelling at you through their car radio right this second, yelling at you through their phone right this second, going, you've got to be kidding me. You know they are. And I'm not. I'm not trying to be mean to you, honey. I love you and I want you to win because you've got. You're going to be. You could do so much good. You're going to have an incredible life with this income. And you're smart people. You're not dumb people. But boy, you're doing some dumb butt stuff. And you got to change that, kiddo. Sorry, but I love you and I want you to win. And thank you for calling. Open phones at Triple 8-825-5225. So, Ken, you remember that Tom Stanley wrote the original book back in the 90s called Millionaire Next Door? Tom passed away in a car accident. His daughter Sarah still runs a bunch of research. Tom did another book after that. Matter of fact, I think it might have been the last book before he died he did call. Stop acting rich. And because people have confused out there, a bunch of you, a bunch of people have confused in America that income means wealth. Income does not mean wealth. Net worth means wealth. Net worth comes from living on less than your income. That's where it comes from. That's right.

[Ken Coleman]

There's also this disease where I think, people think if I can balance it. And I'm thinking about the old cartoon, I don't know if it was Sylvester the cat, where the plates would fall off and he's scrambling, trying to catch all the plates. So this idea of if I can balance all the stuff, then I can have what rich people. And that's the idea that he's talking about. And it's not. There's a difference between balancing it versus affording it. They think they could afford it because they're balancing. And then what we see is the plates start to drop. And in this case, her health is dropping. The burnout, stuff like that. I mean, it just. You can't keep trying to balance all these plates. Spinning all these plates.

[Dave Ramsey]

Yeah, it'll kill you. It'll just kill you. That's what's burning you out.

[Ken Coleman]

I agree.

[Dave Ramsey]

Plate spinning, plate spinning will kill you. And, and. But guys, if you make a good income, you're not rich. You're not rich. Not until you live on less than that and you build a net worth. That's what makes you rich. You can't out earn your stupidity. I tried it. I was good at it. Couldn't do it. This is the Ramsey Show.

[Caller]

CHM isn't health insurance. It's a health cost sharing ministry. Check it out for [e-mail] budget.