I'm $60,000 In Credit Card Debt, Is This The Best Way To Get Out?
TLDRCourtney, a recently divorced mother with a three-year-old child, calls into the Ramsey Show seeking advice on managing her $60,000 debt. She initially considered a cash-out refinance on her home, but with a low credit score and the prospect of higher monthly payments and interest rates, she reevaluates her decision. The host advises against refinancing, highlighting the long-term financial implications. Instead, he proposes a disciplined approach to paying off the debt within 18 to 24 months by living frugally, working extra, and selling non-essential items. The host emphasizes the emotional and psychological benefits of Courtney taking control of her finances as a part of her healing process post-divorce. He offers her a free nine-week class, Financial Peace University, through Ramsey Plus, to guide her through the process. Courtney agrees to commit to the plan, seeing it as an opportunity for personal growth and a positive example for her child.
Takeaways
- π‘ The caller, Courtney, is recently divorced and has $60k in debt, mainly from credit cards, which she has had for about five years.
- π Courtney is considering a cash-out refinance on her home due to its equity, but her low credit score is causing her to work with a broker, which would increase her monthly payments and interest rate.
- π« The host advises against refinancing, stating it's a short-term solution with long-term negative consequences, especially with a higher interest rate and unaffordable payments.
- πΆ Courtney has a three-year-old child and has been divorced for almost a year.
- πΌ She works as a public health researcher and has an annual income of around $100,000.
- π‘ Courtney's house is worth $430,000, and she owes $150,000 on her mortgage, in addition to the $60,000 in credit card debt.
- π The host suggests that with discipline and a strict budget, Courtney could pay off her debt in about 18 to 24 months.
- π° He emphasizes the importance of emotional control over finances and not treating credit card debt lightly.
- π€ Courtney acknowledges that she has not accumulated more debt because she has reached her credit limit, not because she has necessarily learned financial control.
- πͺ The host motivates Courtney to take control of her finances as a form of personal growth and healing after her divorce.
- β¨ He offers her a free nine-week class called Financial Peace University through Ramsey Plus to help her get started on the right financial path.
- π The host highlights that by taking control of her finances, Courtney will not only eliminate her debt but also set a strong example for her child and regain her self-confidence.
Q & A
What is Courtney's current financial situation?
-Courtney is recently divorced and has about $60,000 in debt, primarily from credit cards, which she has been struggling to pay off.
Why did Courtney consider a cash-out refinance on her home?
-Courtney considered a cash-out refinance because her home has a lot of equity, but due to her low credit score, she would have to go through a broker, which would result in a higher interest rate and increased monthly payments.
What is Courtney's annual income?
-Courtney makes approximately $100,000 to $101,000 a year.
What is the current value of Courtney's home?
-The recent appraisal of Courtney's home is for $430,000.
Why did Courtney purchase her home before getting married?
-The script does not provide a specific reason, but it is mentioned that Courtney bought her home before she was married, indicating it was her separate property.
What is the current status of Courtney's credit card debt?
-Courtney has not accumulated any new debt as she has no additional credit available. She has been making only minimum payments on her existing debt.
How long has Courtney been divorced?
-Courtney has been divorced for almost a year, with the finalization taking place in the previous August.
What is Courtney's occupation?
-Courtney works as a public health researcher.
Why is the host advising against Courtney's plan to refinance her mortgage?
-The host advises against refinancing because Courtney would be solving a short-term problem with a long-term solution that comes with a higher interest rate and unaffordable monthly payments.
What is the host's proposed solution to Courtney's financial situation?
-The host proposes an aggressive repayment plan, suggesting Courtney commit to 18 to 24 months of financial discipline, living on a tight budget, and working extra to pay off her debt.
What program does the host offer to Courtney to help with her financial education?
-The host offers Courtney a free enrollment in a nine-week class called Financial Peace University through Ramsey Plus.
How does the host frame Courtney's upcoming financial journey?
-The host frames Courtney's journey as an opportunity to become a 'warrior princess,' gaining control over her finances and setting an example for her three-year-old child.
Outlines
π Divorce and Debt Management
Courtney, recently divorced, discusses her financial situation on the Ramsey Show. She has a home with significant equity but is facing a $60,000 debt, primarily from credit cards, which she has been struggling with for five years. Initially considering a cash-out refinance to consolidate her debts, she is advised against it due to her low credit score and the resulting higher interest rates and increased monthly payments. Courtney earns around $100,000 annually and is a public health researcher. The host encourages her to take control of her finances, suggesting a disciplined approach to budgeting and debt repayment, aiming to eliminate her debt in 18 to 24 months.
π° Financial Empowerment Post-Divorce
The conversation continues with Courtney being encouraged to view her financial situation as an opportunity for personal growth and to regain self-trust. The host proposes a disciplined financial plan, emphasizing budgeting and avoiding unnecessary expenses. Courtney is reassured that with commitment and hard work, she can pay off her debt and regain financial stability. The host offers Courtney a free nine-week course called Financial Peace University through Ramsey Plus, which will provide her with a comprehensive plan to manage her finances effectively. The host emphasizes the importance of Courtney's role model status for her three-year-old child and the transformative impact her financial turnaround will have on her life and her family's future.
Mindmap
Keywords
π‘Divorce
π‘Debt
π‘Cash-Out Refinance
π‘Credit Score
π‘Equity
π‘Monthly Payment
π‘Interest Rate
π‘Budget
π‘Emotional Debt
π‘Self-Trust
π‘Financial Peace University
Highlights
Courtney is recently divorced and has $60k in credit card debt
She considered a cash-out refinance on her home but is reconsidering due to higher interest rate and monthly payment
Courtney has been divorced for almost a year and has a 3-year-old child
She makes around $100k per year and her house is worth $430k
The $60k in debt has been accumulating for about 5 years, which was before her marriage
Courtney has not taken on any new debt recently as she has reached her credit limit
She has been married for 2 years and works as a public health researcher
The host advises against the cash-out refinance, calling it a short-term solution to a long-term problem
The host suggests Courtney can pay off her debt in 18-24 months by aggressively tackling it
He emphasizes the importance of changing her mindset and behavior around money
The host compares Courtney's situation to a life lesson and an opportunity for growth
He encourages her to take control of her finances and not let them control her
The host offers to sign Courtney up for a free 9-week financial peace university class
The class will provide a step-by-step plan to pay off her debt in 18 months
The host frames Courtney's situation as a chance to become a 'warrior princess' and role model for her daughter
He emphasizes that building financial discipline will lead to long-term wealth and success
Courtney agrees to commit to the 18-month plan and take control of her finances
The host celebrates Courtney as a 'hero in the making' for taking this step towards financial freedom
Transcripts
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