Our Debt Is Crushing Us

Terra is with us in Lexington Kentucky hi Tara how are you hi I'm well thank you so much for taking my call sure what's up so basically long story short and my husband and I both kind of came from inside of our situation growing up and so we decided we were going to do everything right we went to college we bought a house you know and all this stuff and now basically we sent ourselves in a position where we make decent money but even something as simple as like getting the oil things in the car you know it's stressful just because you know our income is just maxed out completely and when you have so much debt and we just don't know where to start okay um and so what is your household income and we make right around 90 thousand a year okay and what what kind of debt do you have not counting your house um so the worst thing we didn't make very smart decisions in college and so we have about $100,000 between the two of us in student loan debt we have a little over $60,000 in cars and we're upside down on both cars so we're not really sure how we would even go about selling them to get out from under room we've got about ten thousand dollars in credit cards we've got a ten thousand dollar personal loan we've got some medical bills just a little bit of everything really all right so about $200,000 in debt not counting your house pretty close to that yeah and what are you rolling at home and we owe about a hundred and twenty eight thousand right now so it's not the problem all right all right well what you did was you came out of school and I acted like there was no how long have y'all been out of school and well we myself I've been out for I guess it's about six years and seven years and then my husband and he worked full-time through the whole time I went a lot slower so he actually just graduated a couple years ago yeah but from college age you guys are seven years out you fit the pattern because basically you just not anything you wanted to buy and didn't think about the consequences until you added it all up and can't breathe exactly thank you I see holes education cars things on credit cards whatever we just put it on it you know let's just go get it as long as I can sign a piece of paper and walk out with the item I'm good let's go so hopefully so uh that the question then comes is this I I've worked with folks in your situation and I've been in Dumber situations and deeper situations than you're in I've done Dumber things and you've done um but the you know what I found is that when you wake up in this situation the people who are able to change their lives make dramatic moves because they are truly sick and tired of being sick and tired is that you guys yes I mean it's just we should not feel the way we feel every day is so stressed and and we're just surviving basically okay so here's what we're going to do we're going to sell both cars when I cut up your credit cards you're not going to go inside a restaurant for the next three years and you're not going on vacation oh I'm not kidding I'm serious look you're broke you're on the verge of bankruptcy and if you do not get radical you're going to see the bankruptcy court when these cars are freaking insanity absolute insanity yeah that you own sixty thousand dollars or the car debt and you make ninety I mean the finance manager must have been smoking crack who makes this loan you didn't qualify for that that's awful it's a disaster and you sitting there with a hundred thousand dollars and student loan debt and then you go do that oh my gosh yeah two beaters you get two one thousand dollar cars and we get ready things so who do you owe the money to on these two stupid automobiles and one of them is US bank and then the other one is a credit union perfect that's good news so the worst part of that is that also tells me you have a fairly high interest rate on both of them don't you and well I think it's not terrible and I think we're ever met around 4% and the other one it may be like six or so maybe no not as bad as I thought I was wrong okay well here's what you do you go to the local branch of US bank you go to your credit union you sit down in person both of you and you talk to them about the fact that you are on the verge of bankruptcy and that you don't want to file bankruptcy and we want to get out of this but we want to turn this around before we get past the lip and can't get back in the bowl okay and so you guys here's the deal we're going to sell these cars and you're gonna you're talking to your branch manager now and you're going to allow us to sign a note for the difference for the amount upside down and and then you put the car up for sale you don't panic and give it away you don't let it be repo'd and you don't you don't sell it to a dealer at wholesale you put it on Craigslist and get the most out of it you can get because whatever you don't get you're going to have to pay back in a debt okay and so get on Kelly Blue Book kbb.com put those cars in there with your husband tonight when it gets home and figure out what you can sell them for a private sale and get rid of them and sign a note for the difference you're gonna have to do a little negotiating a little talking a little persuading with this Bank in this credit union but they are already unsecured on that portion of the debt so they might as well let you sign an unsecured personal note for that portion of the debt even if they bump the interest rate up a little bit I don't care I want rid of these ridiculous automobiles and then you guys go get you a thousand dollar car to get back and forth to work so you need four right now we're not going to drive a beater the rest of our life but for right now you're driving a beater and you're looking for extra jobs and anything you can do to get your income up what are you own that you could sell well it's like not my truck I feel like we owe on everything that we have pretty much and I don't know we could go through our garage and see if maybe there's anything as far as tools or a sell abroad so let's have a garage sale this weekend let's put the cat on Craigslist a dog on eBay let's try to get some stuff moving in the money and then any extra work you guys can pick up anywhere to add to the income and then we cut the credit cards up if you can put the student loans temporarily on a hardship deferral that would be fine if not that's May the very minimum and then I want you to get on a tight budget no eating out no vacations we're completely scorched earth on the deal here so if we take 200,000 and we pay 50,000 for four years mm-hmm you're debt-free if you sell the cars you can probably do it in about three okay but you're going to have no life for three years so that you have a great life after that right but the problem is that you can wander into that you can't wander out you have to get wired up fired up and go crazy like I'm talking about here this scorched earth mindset this okay and that's what getting you out that's what gets you out if you're willing to walk through that I'll show you how to do it the nine week class we have is called Financial Peace University I will pay for you to go if you and your husband will promise to both attend that I'm going to put you on hold Kelly's going to pick up if you make her that promise she'll put you in the class if you don't then you're going to wander along until you figure out that you're going to have to get serious about this this is the Dave Ramsey show hey guys thanks for watching if you enjoyed this video click the subscribe button to get the latest content and check out these other great clips from the show [Music] [Applause] [Music]

Channel: The Dave Ramsey Show

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Id: LLffZtKL9RQ

Length: 8min 3sec (483 seconds)

Published: Thu May 11 2017