Dave Ramsey Loses His Patience With A Couple Who Owes $119,000 Despite Making $300,000 Per Year: 'I Can't Help You'

Financial expert Dave Ramsey spoke with a caller in a recent "The Ramsey Episode," and the exchange demonstrated that you can't help someone who isn't willing to change.

The caller has a household income of $300,000 per year. Despite the high income, the couple owes $119,000. It's progress since the couple used to be $160,000 in debt. 

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However, the caller seemed more focused on rationalizing why they were stuck in debt instead of making conscious decisions to change their spending habits. No matter what advice Ramsey provided, the caller seemed to have an excuse and magnified their circumstances. This trend continued during the call, prompting Ramsey to get frustrated.

"I can't help you," he said.

The exchange offers valuable lessons for people who are looking to get out of debt.

More Money Doesn't Solve All Problems

The wife initially called into the show asking if she should take out a home equity line of credit or a home equity loan to pay off her debt. While debt consolidation is a good strategy to get a lower rate, it's expensive to keep going into debt. You have to pay origination fees, closing costs, and other expenses. 

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Ramsey shifted the conversation to the couple's current debt and spending habits. They have $55,000 in credit card debt, $22,000 in student loans, $23,000 in personal loans, and $19,000 in car loans.

"You guys spend like you are in Congress. Your lifestyle is eating you alive," Ramsey stated.

He went on to say that the couple doesn't have an income problem. Both spouses are engineers, so not only are their earnings already good, but they can boost their earnings along the way. However, Ramsey noted that they have a spending problem.

A spending problem can negate all of the benefits of a high income. If you constantly spend more than you earn, then it doesn't matter how much you earn. You will still end up broke.

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Ramsey's Solution

Ramsey suggested that the couple sharply reduce their expenses and pay off $8,000 of their debt every month. Following this strategy, the couple could become debt-free within two years. It's not a tall order. If the couple pays $100,000 toward debt each year, they can live on $200,000. Of course, this calculation assumes that taxes are a part of the $200,000.

This approach can help the couple keep their finances under control. The wife mentioned that they spent money on unnecessary things, like a new AC, a new furnace, and a fence for the property. While you can make these expenses gradually, it's not the best move to incur these costs while sitting on a big debt. 

There's No Need To Get A HELOC

Ramsey was against the couple taking out a HELOC or a home equity loan to consolidate the debt. His argument was that using debt to pay off debt was like a "Get Out of Jail Free" card. You eventually have to confront the bad money habits that put you in debt. A HELOC delays that confrontation and the couple may feel justified in getting even deeper into debt since the monthly payments are more manageable. 

Ramsey said he couldn't help the couple since they were more focused on legitimizing their financial mess instead of fixing it. No matter how much you make, you can still end up in debt if you aren’t careful. 

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