We're $53,000 in Debt and Treading Water

Brought to you by the every dollar app. Start budgeting for free today. I was just calling in just want to say I love the show and I'm new to Ramsey, but I'm really throwing myself into, you know, everything that y'all teach. I've already completed baby step one and I just wanted some direction on how to get through step two. Well, welcome aboard Zane. Baptism by fire. Let's go. Proud of you. So what's the picture? Give us the financial picture in baby step two. What are we working on? We're working through about $53,000 in debt. You said 53? Including buy now. Yes, sir. 53,000. All right, break it down. It's going to be about $3,287 in buy now pay later debt, $785 in personal loan debt, $39,380 in car debt, and I have five credit cards, one with Kay Jewelers for $1,415, one with Navy Federal for $4,300, one with Capital One for $1,500, one with Discover for $1,250, and another one with Chase for $1,000. And all those are maxed out except for the card for the ring. I'm exhausted hearing about this. I can't imagine how you're feeling carrying it. Yeah, it's a lot. At least you know your numbers. That tells me you're actually going to get out of this thing because most people have no clue what's going on. They don't want to know. And Zae, you've made a bold choice to go, I'm going to stare this thing right in the face and tackle it. Love it. Absolutely. Yeah, it's a lot. Tell us your income. So I actually just got promoted to full-time from part-time. So now I make $55,000 a year and my husband's in the military and he makes $30,000 a year. Okay, so we're looking at $85,000. You guys are joint finances, I hope? Yes, sir. Okay, great. And is he on board with this Baby Step stuff and this Ramsey stuff? Is he on board or is he freaking out thinking that you got abducted by aliens? What's going on? Where's he at? Definitely abducted by aliens because I was like, hey man, we're doing all this stuff, man. We're paying off all these credit cards and then we're closing them. He said, closing them. I said, closing them. And he was like, uh, we'll come back to it. I was like, okay. I knew it was one or the other, right? We've just taken too many calls. George, that's now an interesting wrinkle in this process. Yeah. I want to know whose car this is. How much money do you have to make where budgeting is just optional? If you chose C, watch this. He makes about $170,000. I make about $115,000. Hold on, did you go back after you paid off everything, borrow some more money? Oh, yeah. Oh, no, Carlos. We like to go here and there and we get this Mercedes and- Oh, no. You went full South Beach. It's not just about how much you make. It's about having a plan for what you've got. So start budgeting with every dollar for free today. I want to know whose car this is. The car's in my name. It's mine. I had it before we got married. What's it worth? It's only worth $25,000. What's the payment on it? $800 a month. Yikes. Where's my Pepto-Bismol, George? Do you have it? I don't. I think we ran out. You used the supply last week. Little indigestion on that one, that $800 a month car payment. Now, did you roll over negative equity? What happened here? Yes, I rolled over negative equity. I had a Chevrolet, which I didn't know those- obviously all of them depreciate, but apparently those super depreciate. And the only reason I wanted a different car is because I commute to work an hour every day and the car that I had wasn't going to suit the drive gas mileage-wise. So I got a 2025 Toyota Camry. That's the only car that could get you an hour each way. That makes sense. Yeah, I was trying to do- It was a joke. He's joking. You don't need a 2025 car to get you anywhere, okay? Just say you wanted a brand new shiny car. Stop shouting, George. I'm just- You're getting a little fired up. It was a test. It was a test. Let me ask a real quick question. What do you do for a living? I'm a bank teller. Okay. And I'm just asking, this is not the primary focus of your call, nor should it be our coaching, but I wonder if you could get a job in the near future doing bank telling or something similar for the same pay that doesn't require you to drive an hour each way. I actually did try to find a job in my area. We live right next to a base, so the area's usually not the best around it. And the pay- I make $24 here, and when I started job hunting, the most they would offer was $12 to $14 over there. All right. Very good. Why is your husband only making $30? He's pretty low rank. He's only an E3. But that still feels- I mean, that's close to minimum wage at this point. Yeah. I mean, they give us BAH and everything, but we don't see it because we live in base housing. So our roof over our head is taken care of. Well, that means your expenses are super low. So do you have any money left over at this point to throw at the debt? No. Last year, I quit my job for two months, and that was not the best choice. And we've been kind of drowning, just kind of treading water ever since, just trying to make sure things get paid at the very least. So you have $1,000 in savings and nothing else to your name? No. Everything else is flying the bill, pretty much every check. Have you done a budget to where you can answer the question of, how much margin do you have that you could throw at this debt? And what I mean by margin is after we've paid the basics, right? So you don't have housing. So I'm assuming you don't have utilities or any of that stuff. So your basic bills, above and beyond that, do you know how much you could throw at this debt every month? Well, what we wanted to do is try to start using only the money I make now, and then just surviving on his paycheck. It just seems kind of hard with the $800 car note. I agree. How to make that work. Staying in debt is going to be even harder. So we've got a hard choice to make here, which is, we're going to have to get out of this car debt. And the only way to do that is to come up with the difference that we're underwater on. So you said it's worth $25. Was that private party value, or was that a trade-in value? I looked on Kelley Blue Book. For private party? Yes, sir. Okay. So that means you're $14,000 underwater on this thing. So that's the number we need to come up with. Now, do you have another vehicle you could use in the meantime? No, sir. We're a single vehicle family. So that's the one. So we need to also come up with a little bit more money to get you a different car that is used in cash, probably $5,000. Okay. So once you add the $14,000 plus, let's say, the $5,000, that's about $20,000 that you need to come up with in order to get out of the $40,000. Do you see how that's a good deal? I do. Yes. That's what I was saying. He's going to be getting moved soon, and we want to go overseas. So that's why we were really like, okay, we need to start going hard, because we want to either get rid of the car or something like that. We want to go over there with no debt whatsoever. What does going overseas do for you guys financially? Financially, we'll be going down to a single income. So we're hoping he'll get a little bit more rank, and we just want to have a different living experience on base and stuff. I think this is a fantasy right now. You guys can't live off two incomes with the debt you have. And so this idea of going overseas is going to have to wait until you guys are completely debt free. Absolutely. So here's the math. You got $53,000. Usually it takes people 18 to 24 months to pay off their consumer debt if they go hard using our plan. That means you got to be throwing $26,500 a year at this debt. That's about $2,200 a month. So that's the real napkin math of what it's going to take. And freeing up that $800 payment is your ticket, which means we got to save up $19,000, $20,000 fast by selling stuff, working extra, living on nothing. Then we can finally get some breathing room and crush the rest of our $14,000 in debt. Create your free every dollar budget today. The simplest way to budget for your life.