The Ramsey Show
You Have To Mentally Take Debt Off The Table If You Want Financial Peace
Fri, 07 Mar 2025
๐ย Are you on track with the Baby Steps? Get a Free Personalized Plan Jade Warshaw & Rachel Cruze answer your questions and discuss: "My husband is a dentist and we're still broke" "I went into debt for my sister's car" "Cancel my vacation after losing my job?" "How do I get out of a debt settlement contract?" "How do I get caught up on retirement?". Support Our Sponsors: ๐ฑ Get 10% off your first month of BetterHelp ๐ฅ Learn more about Christian Healthcare Ministries ๐ก Get started today with Churchill Mortgage ๐ Get 20% off when you join DeleteMe ๐ฆ Go to FAIRWINDS Credit Union for an exclusive account bundle! ๐ฅ Save 15% on your first Field of Greens order with code RAMSEY โจ Find top Health Insurance Plans at Health Trust Financial ๐ธ To find out more about student loan refinancing, check out Laurel Road ๐ป Visit NetSuite today to learn more ๐๏ธ Use promo code RAMSEY for 18% off at The Nokbox ๐ต Learn more about Timothy Plan ๐ Get started with YRefy or call 844-2-RAMSEY ๐ Visit Zander Insurance for your free instant quote today! Next Steps ๐ฑย Watch the full episode for free in the Ramsey Network app. ๐ Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET or click here๐ผFor business and leadership insight, listen to The EntreLeadership Podcast. ๐ Preorder Build a Business You Love Now at Ramsey Solutions ๏ปฟ๐ต Start your free budget today. Download the EveryDollar app! ๐๏ธ See Dave Ramsey and Dr. John Delony LIVE in a city near you ๐ฐ File your taxes with 100% accurate software thatโs 20% of the price Listen to more from Ramsey Network ๐๏ธ The Ramsey Show ย ๐ง The Dr. John Delony Show ๐ธ Smart Money Happy Hour ๐ก The Rachel Cruze Show ๐ธ The Ramsey Show Highlights ๐ฐ George Kamel ๐ช Front Row Seat with Ken Coleman ๐ EntreLeadership Learn more about your ad choices.ย https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy
Chapter 1: What financial advice can help a dentist family in debt?
All right, we've got Emily from New York City, New York. What's going on, Emily?
Hi, thanks for taking my call. I'm mainly calling because my husband and I feel like we make pretty good money, especially for where we live. And we're in a lot of debt, mostly from him going to dental school. And I would love to be a stay-at-home mom. We had to be over the summer. I would just love to not have to work and just be home with her all day.
But I just don't feel like that's the right decision financially until we get out of debt. So I guess I'm just calling to see If that's even feasible for me to do or kind of your thoughts on that.
I mean, it might be. Let's let's run the numbers out. So you said your husband has got it's a dentist. Is that what he is? Yeah. Dental debt. So how much debt is there?
Like around three hundred and fifty thousand.
And what's his salary now that he's working?
He makes like two fifty and up.
It depends. Emily, will that change significantly year by year? Do you guys see that growing or do you think it's going to be pretty consistent for the next couple of years?
I mean, if he owns his own practice, then yeah, it would go up significantly. But then we're taking on more debt. Right.
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Chapter 2: How to handle debt from co-signing a car loan?
Oh, okay.
I just... i would like to stay home but i am still working um i make around 115 115 okay um is there any other debt besides the 350 in school debt to talk about no really that's it any other no cars like um no i mean we have like a little bit left on the car but like i mean we could really pay it down like today i guess how much is a little bit Like less than $10,000.
Okay.
And then no credit cards, nothing like that? No, nothing else. It's mostly the student loans.
What savings do you guys have, Emily?
um we have like 50 000 in an emergency fund okay um and then we're also we're renting right now so we're trying to save up for a house i just feel like we're doing like maybe too much at once but we're like yeah is the 50 000 with is the 50 000 saving for the house too or is that quote unquote just the emergency fund yeah that's just the emergency fund how much is how much is for the house
We have maybe like between 15 and 20 towards the house. Towards the house, okay.
And for New York, are you guys like Manhattan? Where are you guys? Like in the suburbs. Okay. Outside. How much are your operating expenses every month with rent and everything? How much does it take to run your household?
Sorry, I have the number right here. I mean, with everything? Mm-hmm. I feel like we're, like, with savings and everything, we're, like, right on what we bring in a month because we do try to put, like, money towards savings.
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Chapter 3: Should I pause retirement savings to pay for a master's degree?
I feel like I can't not work until... Like we're in a home, like our own home and not renting.
I mean, that's your prerogative. I mean, I think what Rachel and I are outlining, what she just outlined is the fastest possible way. The fastest possible way is you continuing to work. You live on your one salary and you plow through this. Another option is you're like, listen, Jade, I've got this little baby. I want to be home now. If you do that route, then it's only your husband's income.
Yeah, it's going to double the amount of time it's going to take you to get out of debt. which you're still not far beyond that parameter of the one and a half to two years if you really double down and really get on a tight budget on that. So you've got options, but as long as you know, this is what we're doing. We're paying off the debt first and pausing all savings and retirement to do that.
Then after that, we're saving up And for you guys, I think you'll already be set up to do this, but you're making sure that you buy that house based on the one income that you're going to be living off. So based on the $250,000, I wouldn't base it on what he might make in the future because you really don't know. And the worst thing to do would be to get more house than you can pay for.
And then it feels like a burden, right? So I think if you're making those decisions, you're going to be okay.
Yeah, and I think too, Emily, it's one of these like, it's a values conversation, right? I mean- You can say, you know, we value right now me being home and it's where I want to be. And if that's what you and your husband agree with from like a lifestyle perspective and that your family decides that, that's great. That's what you guys have decided. Now run the math on that.
And if that starts to feel... like you can't breathe and that you're going to be home, but you're going to be stressed out because you guys are living on nothing for four years where you're like, okay, I could just do one more year, get out of this debt. You know what I mean? Like it's a, it's an either or game.
But for me, just like now when the baby's little, it might be like, do it now so that you are home when they're four or five, six, when they remember all of it.
Yes. When they remember. Ooh, I love it. This is the Ramsey show.
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Chapter 4: Is it wise to cancel a vacation after a job loss?
What about your own car? You owe $6,000. What's it worth? Is that one upside down? And what did it begin as?
I started with this car at 15. I took out a six-year loan. So I owe $6,000 on this car. Teddy Blue Book put it for $7,000. I had a dealer call me and say, hey, give me $8,000 for it. So that's a plus. But I would still have to pay rollover, you know, her car if I get a new car. So either way, I wouldn't be before both situations.
Okay. I'm more inclined to keep the car that you have possibly. Let's find out more about your income. Tell us about your income. Tell us about your other debts so we can get a fuller picture here.
So I make $47,000 a year. Um, very little money. It's not that much. I am currently renting. So my rent is only 15. Um, I have $10,000 in credit card debt already. And, uh, she put $418 of easy pass tickets in my name that I also have to pay for.
You can't, uh, you said easy pass tickets. Is that something you can dispute as fraud? Um,
No, I can't dispute it because she was driving the car and the police is in my name.
Oh, got you. OK, so tolls, not like part. I got it. Tolls. OK. Oh, my. Your sister. Can I just ask? This is neither here nor there. But did you know that she was capable? Yeah. Shifty from the beginning. Did you know that? Or are you just learning this about her?
I'm just learning this about her. Nobody in my family would help her. And I felt really bad for her because she's in a bad situation. And financially, during that time, I didn't have any debt. And all I had was my car. So I said, hey, I don't mind helping you as long as you pay. But now I'm stuck with this debt.
I wonder if... So my first thought is, yeah, definitely got to get out of the car note, the $22,000 one.
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Chapter 5: Should I sell my investment property before retirement?
See if you can get a personal loan for the difference or go down to the credit union. I don't care where you do it. I just care that you get, I'd rather you owe $8,000 than $22,000.
Even if it's a slightly higher interest rate, I still care about that because you're going to be able to, it's going to free up a little bit more money and you're going to be able to clip through your $6,000 car note faster by lowering that amount of debt, therefore the payment on it.
So I still don't get a new car. Don't try to have it roll over.
No, no, no, no, no. Because you're a you'd be rolling over negative equity and B, you're not solving the problem at the root, which is the debt. The debt is the problem, whether it was debt from, like Rachel said, stupid tax or debt from your own car or your own credit cards. Debt is still the problem. And we don't want to you can't solve a problem while simultaneously creating it.
So you've got to, you know, put a full stop on debt.
Okay. Yeah. Okay. So yeah, so keeping your car, Jasmine, and then your goal is for the debt snowball, you're gonna pay off your debt smallest to largest. So even with the credit cards, which we didn't really talk about in here, but you know, listing those out, if it's if it's three or four cards, and one is $2,000 balance, one's 4000, whatever it is.
So let's just pretend that the car sold a $22,000 car and you now have an $8,000 loan. So you have an $8,000 car loan or a personal loan because of the car, your $6,000 car loan, and then list out your credit cards all separately. And then sit there and just say, okay, smallest debt to largest debt. And you're going to pay minimum payments on everything and pay the smallest one off first.
And again, even if it's the... Even if one of the credit cards is a $1,200 credit card, pay that one off first. And then you're going to go down the line because that's how you're going to get the most effective use of your money. Once that's freed up, that credit card is paid off, frees up a couple hundred bucks a month to roll over to the second smallest debt. And you just keep that going.
And God, Jasmine, I'm so sorry. But for everyone listening, this is why you don't co-sign. Because the bank looked at the sister and said, we don't trust you. No, they said you won't be able to make the payments. And if a bank won't give you money, who gives money to dogs? They like send dogs credit cards in the mail. Banks will give any money to anybody.
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