"You Make $400,000 And Owe $700 On A Mattress?"

Summary

Episode Overview

Theme:
In this episode of The Ramsey Show Highlights, the hosts take a call from Jake, a high-earning mortgage industry professional, who is wrestling with whether to treat himself to a high-end watch while still carrying a few small debts. The conversation quickly pivots from material purchases to broader advice on debt management, financial discipline, and the psychology behind keeping debt even when financially able to pay it off. The hosts blend their signature tough love with encouragement as they guide Jake toward debt-free living and responsible celebration.

---

Key Discussion Points & Insights

1. Treating Yourself vs. Guilt (00:11 – 01:00)

• Jake’s Goal: He’s considering buying his first luxury watch for around $10,000, but feels guilty about spending so much on himself.
• Discussion: The hosts probe Jake’s finances and current debts to determine if the purchase is justifiable.

Quote:
“I don't feel guilty spending it on you if you've got it. Are you—do you have any debt?” — Host A [00:43]

---

2. Debts and Financial Picture Revealed (01:00 – 01:48)

• Jake admits:
  • Owes $700 on a mattress, which he could pay off immediately.
  • Owes money on a car, even though one is paid off.
  • Holds a significant income—projected to make $400,000 this year.
  • Total cash assets approach $1.2 million (including $600–700k in retirement, rest in post-tax investments and savings).

Memorable Line:
“No, you don’t need to buy a $10,000 watch. You have a car debt. Okay, you’re broke.” — Host A [01:01]

---

3. Challenging Debt Rationale & Ramsey’s Philosophy (01:48 – 02:25)

• Hosts’ Reaction: The hosts are incredulous that someone with Jake’s income and assets is carrying any consumer debt—especially on depreciating items like a mattress and car.
• Jake’s Awareness: He acknowledges the call was an invitation for tough love.
• Actionable Advice:
  • Pay off all small debts immediately.
  • Use the watch purchase to celebrate debt freedom.

Quote:
“It’s ludicrous to borrow money on a mattress... And it’s almost as dumb to borrow money on a car when you have the money sitting in the bank.” — Host A [02:05]

---

4. The Mortgage Dilemma (02:54 – 03:41)

• Jake’s Status:
  • $290,000 left on a $750,000 house.
  • Hesitant to pay off the mortgage, citing uncertainty and the comfort of liquidity.
• Hosts’ Push: They challenge Jake to consider the freedom and lower risk of full debt freedom—even on the primary residence—especially given his industry experience and buffer assets.

Dialogue Highlight:
“Why does that scare you?” — Host A [03:07]
“Because he’s a mortgage [guy].” — Host C [03:08]

---

5. Finishing Strong: Mindset and Game Plan (03:41 – 04:34)

• Debt-Free Mindset:
  • Encouraged to pay off all debts (“car, house, mattress, everything”).
  • Emphasis on harnessing fear of lower cash reserves as motivation to excel further.
• Big Picture:
  • Jake is affirmed for his overall financial success.
  • The hosts stress the importance of implementing and sticking to a written financial game plan.

Notable Quotes:
“If I woke up in your shoes, sir, I would be 100% debt free and wearing a $10,000 watch by the end of the month.” — Host A [03:27]
“If you're just a tiny bit afraid about having less cash assets, it'll motivate your butt to do more deals.” — Host A [03:55]

---

6. Life Lessons and Closing Encouragement (04:34 – 05:30)

• Responsibility of Wealth:
  • Jake is reminded not to out-earn financial mistakes but to “lay in place a system” for wealth building.
  • Permission is granted—celebrate with purchases once debt freedom is achieved.

Quote:
“You’re doing so good. Why... just lay it in place. A system. Work the stinking system, man. And then go bank a pile of money and apply it to the system.” — Host A [04:54]

---

Memorable Quotes with Timestamps

• “No, you don’t need to buy a $10,000 watch. You have a car debt. Okay, you’re broke.” — Host A [01:01]
• “It’s ludicrous to borrow money on a mattress... And it’s almost as dumb to borrow money on a car when you have the money sitting in the bank.” — Host A [02:05]
• “If I woke up in your shoes, sir, I would be 100% debt free and wearing a $10,000 watch by the end of the month.” — Host A [03:27]
• “If you're just a tiny bit afraid about having less cash assets, it'll motivate your butt to do more deals.” — Host A [03:55]
• “You’re doing so good. Why... just lay it in place. A system. Work the stinking system, man. And then go bank a pile of money and apply it to the system.” — Host A [04:54]

---

Timestamps for Key Segments

• Luxury Watch Guilt: [00:11 – 01:00]
• Debt Confessions: [01:00 – 01:48]
• Immediate Tough Love: [01:48 – 02:25]
• Mortgage Conversation: [02:54 – 03:41]
• Building a Fully Debt-Free Life: [03:41 – 04:34]
• Encouragement and Systems: [04:34 – End]

---

Tone & Takeaways

The hosts deliver their signature blend of tough love, humor, and practical advice, urging Jake—and listeners—to avoid unnecessary debt, especially when earning a high income and holding significant assets. Their verdict: celebrate your victories, but only after achieving true debt freedom—and don't let financial “comfort” justify inefficient money management.

Transcript

[A]

If your private student loans are in default, you're not out of options. Go to yrefi.com Ramsey called in to.

[B]

See if it was appropriate or what should I do first before purchasing a higher end timepiece.

[A]

Cool. What's the watch.

[B]

Looking at? Various brands. The typical Rolex, Panerai Omega. I haven't really narrowed it down, but kind of feel guilty.

[A]

You're thinking about a budget of what, 10, 20?

[B]

Rent? 10ish. Yeah would be right. It's my first one. Guilty spending that much money on my. Myself. So I don't.

[A]

I don't feel guilty spending it on you if you've got it. Are you. Do you have any debt?

[B]

We've got house, a car, one of the cars is screen clear and then no other debt besides that. Well, I got a fess up. We. We owe 700 bucks on a mattress that I could pay off right now.

[C]

How much?

[A]

No, you don't need to buy a $10,000 watch. You have a car debt. Okay, you're broke.

[B]

What do you make this year? I will eclipse 400. Good God mission, what do you do? You know, anywhere? I'm in the mortgage industry.

[A]

How long have you been in the mortgage industry?

[B]

19 years.

[A]

Wow.

[C]

How old are you, Jake?

[B]

I'm 41.

[A]

Okay, so why pray tell, if you made 400 grand, do you have a car debt?

[B]

I don't know. I could pay it off too.

[A]

Good. You have the money in the bank to pay it off?

[B]

Yeah.

[A]

How much money have you got in the bank?

[B]

We are approaching 1.2 in total cash assets.

[A]

Okay, you don't. I mean, you're not talking, you're not talking about retirement.

[B]

Six or 700,000 of that's retirement. The rest is post tax, 529s, stocks, bonds, cash. Just various.

[A]

Well, it's ludicrous to borrow money on a mattress. I can't imagine what you were smoking that caused that. And it's almost as dumb to borrow money on a car when you have the money sitting in the bank to write a check and pay for it. So, I mean, you did call the Ramsey show, you know that, right?

[B]

I'm aware. I'm aware. I knew you were going to beat me up a little bit.

[A]

All right, so yeah, I would go buy the watch as soon as I pay to celebrate paying off the car and the thing and to celebrate my newfound debt freedom, that I'm never going to do this again because I make too stinking much money and I have too stinking much money to be buying things with debt. But no, you. If you make 400 grand and you're debt free, except your home and you have a half a million dollars in non or 700,000 in non retirement cash assets laying around, you can do a $10,000 watch. Absolutely.

[C]

How much is left on the mortgage, Jake?

[B]

We owe 290 and the house is worth 750.

[A]

Why don't you go ahead and pay it off?

[C]

Get the house paid off.

[A]

Go ahead and pay it off too.

[B]

Scares me. So hear me out.

[A]

Why does that scare you?

[C]

Because he's a mortgage.

[B]

400 every year. It's been a good year.

[A]

Yeah, Unbelievable year.

[B]

Up and down, you know, But I.

[A]

Mean, it would scare me. Le. I mean, if I had no income, I would rather have no mortgage.

[B]

Just the feeling of having the cash.

[A]

Yeah, it's a feeling and it's a. You're in the mortgage business. I'm trying to get into paying a mortgage off. I get that. But you know, but yeah. If I woke up in your shoes, sir, I would be 100% debt free and wearing a $10,000 watch by the end of the month. Car, house, mattress and everything. That's where. That's exactly where I would be. And then I'd be on a written game plan.

[C]

And then you make a crap ton of money.

[A]

Because here's the other thing. If you're just a tiny bit afraid about having less cash assets, it'll motivate your butt to do more deals.

[B]

Yeah, well.

[C]

And with that income, which I know you don't get that every year, Jake, but like, you can replenish the cash very fast.

[A]

Yeah, you built it pretty quick. So yeah, you've done a really, really good job. I will tell you in general, you don't need to feel guilty when you can spend the money and it's a small percentage of your world. And in general, that's the answer to your question. Yes, but I gave you a lot of detail to go around that. Of all the things I would do. But you did ask and you did call this show. So that. That's exactly what you've done. Very, very well. Don't I into this because you're a great salesman and salesmen sometimes run into what I did. I tried to out earn my stupidity for a while. Just lay it in place. A system. Work the stinking system, man. And then go bank a pile of money and apply it to the system. You're doing so good. Why refi Refinances defaulted private student loans for struggling borrowers. Learn [e-mail] Ramsey.