In a recent episode of “The Ramsey Show,” a couple in their 70s shared how they went from being completely debt-free to falling back into financial chaos. After completing Dave Ramsey’s Financial Peace University in 2016, they had paid off all their debt by 2017 and even bought their mobile home in cash. But today, they owe $46,000.
13 Credit Cards and a $29,000 Loan Offer
“We were debt-free completely,” the wife, who called in, said. But since 2017, they opened 13 credit cards and took out three personal loans. Their current income is limited to Social Security: $1,600 a month from her, $1,500 from her husband. Her husband picks up odd handyman jobs, but it’s not enough to cover their expenses.
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Recently, they applied for a $29,000 debt consolidation loan and wanted Dave’s advice before accepting it. “That will put us into a debt relief loan,” she said. “We haven’t bought it yet, but we were able to obtain a loan.”
Jade Warshaw, Ramsey’s co-host, wasn’t having it. “You’re still looking to debt as the solution for this,” she told her. “You haven’t learned your lesson that debt is the issue.”
The couple insisted they were always “100% paying the bills on time.” I don’t know how we’ve done it,” she said.
“That’s not a miracle,” Ramsey replied. “You paid the stinking credit cards before you did anything else. Then you barely ate, and your husband swung a hammer enough to get it done.”
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Living Beyond Their Means In An Expensive Area
The couple lives in Riverside County, California, about 100 miles from their family in Los Angeles. Their mobile home and the land it’s on are worth around $135,000. But even owning their home outright hasn’t kept them afloat.
“You can’t even pay the payments on what you’ve got,” Ramsey said, noting their $3,100 monthly income doesn’t stretch far in such a high-cost area. “You’re telling yourself a lie,” Warshaw added.
Ramsey pointed out the underlying issue: “We don’t have math that is sustainable here. The pattern keeps you spending more than you have coming in.”
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He emphasized that debt consolidation is not the way out. “You cannot borrow your way out of debt,” he said. “So no, do not take the $29,000 loan.”
Instead, he urged them to increase their income, stick to a strict zero-based budget and pay off their debt aggressively. “If you did $2,000 a month, you would be done in 23 months. If you did twice that, you’d be done in 10 months.”
“You have to stop it,” he said bluntly. “You’re going to wake up at 81 in the same situation. And the 91.”
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This article A Couple Followed Dave Ramsey And Got Out Of Debt. Then They Took A Hard Turn And Ended Up $46,000 In The Red On 13 Credit Cards originally appeared on Benzinga.com
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