I'm $46,000 In Credit Card Debt and Tired Of It!
TLDRIn the provided transcript, a 34-year-old man with a family of five finds himself in a challenging financial situation, with a new mortgage, a paid-off rental property, and significant credit card debt. He and his wife are seeking advice on managing their finances and reducing debt. The conversation emphasizes the importance of budgeting and financial discipline, suggesting that the couple should first focus on creating a budget and attending financial peace university to gain a better understanding of financial management. The advisor recommends against making hasty decisions about selling the rental property and instead advises them to establish a financial plan and behavior change. The goal is to achieve long-term financial stability and peace of mind, which will also help alleviate the stress and burnout the man is experiencing.
Takeaways
- π‘ The caller has a mortgaged house worth $312,000 and a paid-off rental property valued at $225,000.
- π³ The caller is in $46,000 of credit card debt and feels like they are living paycheck to paycheck.
- πΌ The caller's household income has varied from $85,000 to $92,000 in recent years, with an estimated $75,000 to $80,000 for the current year.
- π The caller and their spouse have started creating a monthly budget to track their expenses.
- π The caller acknowledges that a significant part of their debt is due to frequent eating out and disorganized spending.
- π The caller is advised to focus on paying down their credit card debt before making any real estate decisions.
- π The caller is encouraged to go through Financial Peace University to learn proactive financial management.
- π± The use of the Every Dollar app is suggested for budget tracking and to help the couple stay on top of their finances.
- π It is suggested to wait 60 to 90 days before considering selling the rental property to ensure a calm and considered decision.
- β The caller is advised against impulsively selling the rental property as a quick fix to their financial issues.
- π« Cutting up credit cards is not recommended; instead, the caller is encouraged to change their financial behavior and habits.
Q & A
What is the main financial issue the caller is facing?
-The caller is facing a significant credit card debt of around $46,000 and is living paycheck to paycheck, despite having a decent income.
What is the caller's current housing situation?
-The caller recently purchased a house for $312,000, which is now valued at $300,000. They also own a completely paid-off rental property worth about $225,000.
What is the caller's annual income?
-The caller's income has varied; last year it was $85,000, the year before around $92,000 to $95,000, and they estimate a safe number for the current year to be around $75,000 to $80,000.
What steps are the caller and their spouse taking to manage their finances?
-They have started working on a monthly budget and are tracking their expenses. They are also considering selling their rental property and are looking for ways to reduce their debt.
What advice is given to the caller regarding their rental property?
-The advice given is to not sell the rental property immediately. Instead, the caller should focus on creating a budget, attending financial peace university, and establishing a financial rhythm with their spouse for 60-90 days before making any real estate decisions.
What is the suggested approach to handling the credit card debt?
-The caller is advised to use the debt snowball method to start paying down their credit card debts. After 90 days, once they have a better financial rhythm, they can consider selling the rental property to pay off the credit cards and then their mortgage.
What is the reason behind not advising the caller to cut up their credit cards?
-Cutting up credit cards is not advised because the caller's issue is not with the credit cards themselves but with being disorganized and out of control in their financial management. The goal is to change the caller's behavior and financial habits, not just the tools they use.
What is the 'debt snowball' method mentioned in the script?
-The debt snowball method is a debt repayment strategy where you pay off your debts starting with the smallest balance first while making minimum payments on larger debts. Once the smallest debt is paid off, you move to the next smallest, and so on, which can help build momentum and motivation.
What is the significance of the caller attending financial peace university?
-Attending financial peace university is significant because it will help the caller and their spouse learn to become proactive with their finances, create a budget, and establish a healthy financial rhythm. This education is intended to lead to a lasting change in behavior and financial success.
What is the estimated timeline for the caller to be out of debt based on the plan discussed?
-The estimated timeline for the caller to be out of debt, without even selling the rental property, is between 18 to 24 months.
How does the caller's life situation contribute to their financial stress?
-The caller's life situation, with five kids and a busy, hectic life, contributes to their financial stress by causing disorganization and leading to reactive rather than proactive financial decisions. This includes time-saving expenses like eating out, which can quickly add up and contribute to their debt.
Outlines
π Financial Struggles and Debt Management
The first paragraph introduces a 34-year-old man with a family of five children, facing financial difficulties. They purchased a house for $312,000 and currently owe $300,000 on it. The family also owns a fully paid rental property valued at $225,000. However, they are burdened with $46,000 in credit card debt. The man's household income has varied, being $85,000 last year and around $92,000 to $95,000 the year before, with an estimated $75,000 to $80,000 for the current year. The family has recently started budgeting to track their expenses and identify 'money leaks.' The man acknowledges that they have been living off credit cards, leading to their current predicament. The advice given is to focus on creating a proactive budget, using the Every Dollar app, and to engage in Financial Peace University to gain control over their finances and reduce debt.
πΌ Addressing Equity and Real Estate Decisions
The second paragraph delves into the family's equity situation and the decision-making process regarding their real estate properties. The man is advised not to hastily sell the rental property to address the immediate credit card debt, which is identified as a symptom of disorganization and lack of financial control. Instead, the focus is on establishing a budget and attending financial education classes to develop a calm and synchronized money rhythm as a couple. The speaker suggests waiting 60 to 90 days to make any real estate decisions, allowing time to implement a budget and witness behavior change. The proposed strategy includes using the rental property's equity to pay off the credit card debt after establishing a new financial system and principles. The goal is to achieve long-lasting financial success, with a timeline of 18 to 24 months to become debt-free, without necessarily selling the rental property. The advice emphasizes the importance of behavior change for sustainable financial health and the anticipation of a significant shift in the man's life and attitude towards finances.
Mindmap
Keywords
π‘Credit Card Debt
π‘Paycheck to Paycheck
π‘Budgeting
π‘Debt Snowball
π‘Financial Peace University
π‘Every Dollar App
π‘Rental Property
π‘Equity
π‘Mortgage
π‘Behavior Change
π‘Gazelle Intensity
Highlights
The caller is a 34-year-old married man with five children facing financial difficulties.
They purchased a house for $312,000 and currently owe $300,000 on it.
The caller has a completely paid-off rental property valued at approximately $225,000.
The family is dealing with $46,000 in credit card debt.
The household income has varied, with last year's income being $85,000 and the year before around $92,000.
The caller and his wife are new to budgeting and have recently started tracking their monthly expenses.
The caller's family is living paycheck to paycheck, indicating a lack of financial planning.
The caller suggests that a significant part of their expenses was due to eating out.
The caller and his wife are considering selling their rental property to alleviate their financial situation.
The host advises against making hasty real estate decisions and recommends focusing on budgeting and behavior change first.
The caller is encouraged to go through Financial Peace University to gain a better understanding of financial management.
The host offers a year's access to Ramsey Plus and the Every Dollar Premium budgeting app to help the caller.
The host emphasizes the importance of becoming proactive with money instead of reactive.
The caller is advised to use the debt snowball method to start paying down their credit card debts.
The host suggests waiting 60-90 days before making any significant financial decisions to ensure a clear and calm mindset.
The caller is expected to be out of debt in 18 to 24 months based on their income and the host's plan.
The host discusses the psychological benefits of financial planning, such as reduced stress and burnout.
The caller is encouraged to find ways to increase income and cut expenses to achieve financial peace.
The host predicts a significant positive change in the caller's life if they follow the advice and take control of their finances.
Transcripts
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