Personal finance guru Dave Ramsey gave some tough advice about The Ramsey Show for a woman and her husband who live paycheck to paycheck and still make $11,500 a month. Here’s the advice Ramsey gave the couple.
Alyssa called the financial expert for advice because she and her husband were worried about their finances. Alyssa tells Ramsey that she has remarried and that as a couple they bring in $11,500 a month, but they are unable to contribute to their retirement and only have about $3,000 in their savings account.
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When they earn a combined salary, the couple comes to an annual salary of $140,000, far higher than the average annual salary in the United States. For example, USA Today reported that the U.S. Bureau of Labor released findings showing that the average American makes $59,384. Even with double that amount, Alyssa and her husband make considerably more. So why are they living paycheck to paycheck? Here’s what Ramsey sets out to find out.
He starts by figuring out how much debt the couple has, and Alyssa reveals that they have a combined $138,000 in debt, $90,000 of which was from Alyssa’s studies to become a mental health therapist. Her husband has the remaining $40,000 from his time in college, even though he didn’t want to go to college. But that’s not all. They still had $60,000 in car payments and a mortgage with $240,000 left. So the total debt is over $130,000.
Ramsey’s co-host, George Kamel, an expert on all things money, asks Alyssa how quickly they can pay off this debt. He asks if they can invest up to $5,000 a month on the smallest debt. Alyssa’s sigh of hesitation worries Kamel, and he asks her what’s holding her back from zapping away at her debt.
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Alyssa’s fear of taking $5,000 a month to pay off debt is motivated by making sure her daughter has enough. Since Alyssa is self-employed and her husband works in construction, she reveals that she worries about “catastrophic expenses.” But that’s not what Ramsey was worried about when she spoke to her.
He tells her, “You know what I’m worried about?” and delivers some hard truths: “You make $130,000 a year and you’re broke. That’s what I’m worried about.” Ramsey points out that they’re living a lifestyle they can’t afford, and that’s what she should be worried about.
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“You have a lifestyle that is absolutely insane, and it has nothing to do with a nine-year-old,” Ramsey said. Alyssa tells the two financial experts that the money she needs for her daughter is for a “just in case,” an emergency fund. But Ramsey doesn’t believe him, explaining, “But you’re not doing anything about it. You have $3,000.” He tells her incredulously that her $3,000 in savings is just a “red herring” and “you’re not doing anything about it except creating fear.”
Ramsey tells Alyssa that she and her husband have no idea where their money is going, so to help them out, Ramsey sets them up with a detailed, written budget. Ramsey tells her that if he looks at their finances objectively, he can easily see that they can set aside at least $50,000 a year for debt and that they should consider selling a car or two. He then gives her some hard advice: “You live like nobody else, so that later you can give and live like nobody else.” To get out of debt, which he jokes has been going on for so long that it’s like their pet peeve, Ramsey tells her that it’s going to be uncomfortable, but it has to be done.
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This article Dave Ramsey’s Tough Advice for Women Making $11,500 a Month: ‘Live Like No One Else So You Can Later Live and Give Like No One Else’ originally appeared on Benzinga.com
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