The Hard Road Leads to Freedom

SPEAKER_1 (0:04)

Brought to you by the EveryDollar app. Start budgeting for free today.

Rachel Cruze (0:14)

Normal is broke and common sense is weird. So we're here to help you transform your life from The Ramsey Network and the FAIRWINDS Credit Union Studio. This is The Ramsey Show. I'm Rachel Cruz hosting this hour with Jade Warshaw, and we are taking your calls about life and money. So give us a call at 888-825-5225.

First up, we have Sarah in Cleveland, Ohio. Hi, Sarah. Welcome to the show.

SPEAKER_3 (0:41)

Hi, how are you?

Rachel Cruze (0:42)

Hi, we're doing great. How can we help today?

SPEAKER_3 (0:45)

So my question is whether or not Chapter 13 bankruptcy is the only way or I guess the best way for my husband and I to get out of substantial debt.

Rachel Cruze (0:54)

OK, what's going on? What are your numbers?

SPEAKER_3 (0:58)

So over the last three to five years, we've basically accumulated 62,000 of credit card debt, 28,000 in loans between house repairs and personal loans. We have a $210,000 mortgage balance. We have about $150,000 in student loans and car leases that are about $11,000 annually.

Jade Warshaw (1:23)

OK. Can you tell me the very first one you said in that list first? I didn't get that one written down.

SPEAKER_3 (1:29)

Credit card is about $62,000.

Jade Warshaw (1:32)

$62,000. OK. Oh my goodness. What happened that you guys got to this extent?

Obviously, the student loans speak for themselves, but the $62,000 in credit cards, the $28,000 in other personal loans, what happened? Did somebody lose a job?

SPEAKER_3 (1:48)

Well, the long story short is we had our son about three and a half years ago, and I had pretty bad postpartum depression. We moved back in with my parents and sold our house, and the plan was to save money and have help, but it was not emotionally feasible. After about eight months, we bought the first house, so we could get an offer accepted on and pretty much put most of our savings down, which made our housing go more than double.

We had a beautiful COVID interest rate beforehand, so pretty much our expenses doubled from there, and then just things just getting out of hand in terms of the cost of living. And I wouldn't say keeping up with the Joneses, but I would just say living like we still had half the expenses.

Jade Warshaw (2:40)

Okay. And you still have that house? You're still in that same house?

SPEAKER_3 (2:44)

Yes. We just bought it about two and a half, three years ago.

Rachel Cruze (2:47)

What do you guys make a year, Sarah?

SPEAKER_3 (2:50)

Our net income is $120,000.

Jade Warshaw (2:53)

Okay. And what percentage of your take-home pay is that mortgage?

SPEAKER_3 (2:59)

Our mortgage is about $1,800 a month.

Jade Warshaw (3:02)

And you take home how much?

SPEAKER_3 (3:07)

Monthly, it's about $10,000 after tax.

Jade Warshaw (3:09)

Okay. So that's not the problem.

Rachel Cruze (3:10)

That sounds terrible.

Jade Warshaw (3:13)

The mortgage is not the problem. Have you started the student loans? It's $150,000. Are you paying on those or have you not been touching those?

SPEAKER_3 (3:21)

We are on income-driven repayment plans right now. So we pay about $200 a month for those. And then the thing that's really killing us is about $2,800, $2,900 of minimum payments between all the credit cards and like the personal loans.

SPEAKER_5 (3:39)

$2,100 in minimums?

Jade Warshaw (3:41)

Okay.

SPEAKER_3 (3:42)

$2,900. $2,900.

Jade Warshaw (3:44)

Okay.

SPEAKER_3 (3:44)

Yeah.

Jade Warshaw (3:45)

And are you guys doing anything extra on the side at this point? Are you working extra hours? Are you working overtime? Tell me about your free time.

SPEAKER_3 (3:53)

Currently, not really. We both work in business and finance. So about half the year, my husband works probably 70 hours a week. So he's not able to take on extra work.

Jade Warshaw (4:07)

Okay.

SPEAKER_3 (4:07)

And I commute to work about an hour.

So there's time loss there. I started to do some bookkeeping on the side, but that's not really lucrative.

Jade Warshaw (4:16)

Right. So here's-

SPEAKER_3 (4:18)

And we do have a three-year-old.

Jade Warshaw (4:19)

Yeah, you do. Here's where I'm at. I'm at, you can take the journey here and really change who you all are, and who you are, and how you operate as a family at a core level and clean this up.

And I think it would be good for you. What I'm hearing right now, Sarah, is I understand how you got here. I'm not a fan of how you got here, but I understand how you got here. But I'm still hearing a lot of reasons why nothing can change. And I think that if you don't address that, that's going to be the hardest part for you. You've got to get to this point where you're like, I don't care what it takes, I'm going to fix this. I don't care if I'm exhausted. I don't care if I have to pick different side jobs that I hate because they make more. I don't care if we have to start looking for jobs. I don't care if we have to sell the house. I don't care, I just want to be free.