With debt in the U.S. still spiraling out of control, one Missouri couple is swimming in an astonishing $240,500 in consumer debt. John from St. Louis called in recently to The Ramsey Show, describing how his debt spread across credit cards, auto loans, a HELOC, student loans, and even a 401(k) loan.
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Dave Ramsey pulled no punches with his no-nonsense approach to personal finances. “You’ve never met a debt you didn’t like,” he admonished flatly. “You people are broke!”
John’s predicament isn’t unique. The average American household has accumulated $104,215 in debt as of mid-2024-about the same number shown on records from both Experian and the New York Federal Reserve Bank. However, excluding his mortgage, John’s number is more than double that amount. It’s a scenario Ramsey says he encounters frequently: families with good incomes are at the brink of financial meltdown.
Despite a pretax income of $151,600, John and his wife have struggled to manage their finances. According to a recent PYMNTS report, their earnings place them among the 48% of Americans making over $100,000 who live paycheck-to-paycheck. Even those over $200,000 aren’t immune – 36% also report the same financial strain.
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High interest rates and record debt levels are major factors that catalyze such trends, and John is no exception. Much of his debt comes from two auto loans: $28,700 on his car and $21,000 for his wife’s car-nearly one-fifth of their total debt-which co-host Jade Warshaw suggested selling at least one of the cars.
But John wasn’t ready to part with the family car. “I don’t really care if it’s the family car, you people are broke!” Ramsey fired back, obviously frustrated. “You’re starving to death, making $150,000 a year. You don’t get to say it’s the family car. You get to say everything’s on the table. We’re selling so much stuff the kids think they’re next.”
Ramsey’s irritation does have some basis in numbers. As of the second quarter of 2024, auto loans reached a stunning $1.63 trillion, making them the largest source of non-housing debt for households in the United States. According to Edmunds, nearly one out of every four Americans who purchased new cars during that period still owed an average of $6,255 on their trade-ins.
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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, stressing the need to quit spending “cold turkey.” He explained, “No use of plastic is going to be OK in your house. You guys have to go cold turkey. You don’t walk around with a flask in your back pocket if you’re trying to quit drinking.”
This stark advice might be exactly what John needs to turn his financial situation around. Though tough, Ramsey’s approach is rooted in his own experience and countless others who have successfully climbed out of debt by facing the harsh reality 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 Onto Family Car While Drowning In $240K Debt – Dave Ramsey’s Brutal Response: ‘You People Are Broke!’ originally appeared on Benzinga.com
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Source: finance.yahoo.com