With debt levels in the U.S. continuing to spiral out of control, a Missouri couple is swimming in a staggering $240,500 in consumer debt. John from St. Louis recently called into The Ramsey Show and described how his debt has spread across credit cards, car loans, a HELOC, student loans, and even a 401(k) loan.
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Dave Ramsey didn’t mince his words with his no-nonsense approach to personal finance. “You’ve never had a debt you didn’t like,” he bluntly admonished. “You’re broke!”
John’s plight isn’t unique. The average American household has racked up $104,215 in debt through mid-2024, roughly the same number as seen in data from both Experian and the New York Federal Reserve Bank. But if we exclude his mortgage, John’s number is more than double that. It’s a scenario Ramsey says he sees all the time: families with decent incomes on the brink of financial collapse.
Despite a net income of $151,600, John and his wife struggle to manage their finances. According to a recent PYMNTS report, their income puts them among the 48% of Americans making more than $100,000 who live paycheck to paycheck. Even those making more than $200,000 aren’t immune, with 36% reporting the same financial strain.
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High interest rates and record debt levels are major factors catalyzing such trends, and John is no exception. A large portion of his debt comes from two car loans: $28,700 for his car and $21,000 for his wife’s car — nearly a fifth of their total debt — leading co-host Jade Warshaw to suggest selling at least one of the cars.
But John wasn’t willing to part with the family car. “I don’t care if it’s the family car, you guys are broke!” Ramsey shot back, clearly frustrated. “You’re starving and making $150,000 a year. You can’t say it’s the family car. You can say it’s all on the table. We sell so much stuff that the kids think they’re next.”
Ramsey’s irritation does have some basis in the numbers. Auto loans reached a staggering $1.63 trillion in the second quarter of 2024, making them the largest source of non-housing debt for households in the United States. Nearly one in four Americans who bought a new car during that period still owed an average of $6,255 on their trade-in vehicles, according to Edmunds.
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Even if John decides to sell his car, the journey to financial freedom won’t be easy. Ramsey compared John’s debt struggle to an addiction and emphasized the need to go “cold turkey” on spending. He explained, “No plastic is okay in your home. You guys need to go cold turkey. You don’t walk around with a bottle in your back pocket when you’re trying to quit drinking.”
This stern advice may be just what John needs to turn his financial situation around. While it’s tough, Ramsey’s approach is rooted in his own experience and that of countless others who have successfully climbed out of debt by facing harsh realities and making drastic changes. Whether John and his wife will take that step remains to be seen, but one thing is clear: the road ahead won’t be easy.
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This article Missouri Couple Holds On To Family Car While Drowning In $240K Debt – Dave Ramsey’s Brutal Response: ‘You’re Broke!’ originally appeared on Benzinga.com
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