Chapter 1: What financial challenges does Peter face?
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Normal is broke and common sense is weird. So we're here to help you transform your life. From the Ramsey Network and the Fairwinds Credit Union Studio, this is The Ramsey Show. I'm Ramsey personality George Campbell, joined by best-selling author Jade Warshaw, and we're taking your calls at 888-825-5225. Peter is in Philadelphia to kick us off. What's going on, Peter?
Hi, how are you? Just... Stressed about bills and thinking about bankruptcy.
Oh, man. How much debt do you have? A little over $25,000. What kind of debt is that?
Maybe closer to $30,000. Car, personal loan, hospital bills, gas bill.
And what's left on the car?
The car is $10,000. The personal loan is $11,000. And that's just personal because I'm trying to get myself out of a jam so I go back into it. You're in a cycle. What do you make? Right. $126,000 base salary. Dude. And I think last year I pulled in about $180,000 for overtime.
America just lost all empathy here. You make $130,000 and you're calling in trying to file bankruptcy over $20,000?
Yeah. What else is going on? What else is eating your lunch? Cause it's not, it's not $25,000 of debt.
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Chapter 2: How can Peter manage his debt effectively?
About $600. Okay.
And what are you taking home? What ends up in your paycheck? Is it like $8,000?
Oh, that's right. I also have a pension loan now. A pension loan? Tell us about that. Yeah. I totally forgot about that because that comes out of my check automatically. So I think I have probably about $24,000 left to pay on that. Okay. How much comes out of your check? $463 every two weeks. What caused you to take that pension loan? Oh, that's a long story. Okay. What about credit cards?
Are you using those? No. Oh, oh, glad you said that. So I got about $6,000 on Capital One. Okay, now it's starting to come to view.
We went from $25,000 up to $15,000, now we're at $56,000. Anything else you want to tell us about? Like, hand on the Bible, what else do you have going on?
Student loans?
I forgot about the Capital One card.
Did you forget about student loans?
I cut it off a year ago. No, I don't have any student loans.
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Chapter 3: What steps should Peter take to regain financial control?
When the reality is you might spend like $1,100 on, on food, right? So go back, get the bank statement for September and use that as a guide.
when you make this budget going into November okay that's going to let you see okay now now you're going to see oh yeah this pension thing came out now you're going to see oh yeah this is what I spend on gas and it's going to take you you know you could do it if I felt like you had an accurate picture you could probably do it in 30 minutes but I really think you need to look at these numbers it's going to take you an hour or so to get this done but it's going to give you like George said so so much peace and the other question is are you investing at all
No, nothing serious. Just pennies on Robin Hood.
No. OK, let's delete Robin Hood for now. Can you promise me that? Yeah. OK, we're not really building any wealth. We're just wasting time.
And what do you get every year when you do your taxes? What kind of refund do you get? I don't. Last year was the first time I owed. OK. OK, good. Yeah. The budget. I mean, it's the blood work. It tells all it tells everything that's wrong with you.
OK, so once you do this budget, you're going to figure out your main expenses. Here's like food, utilities, housing, transportation, insurance, minimum debt payments, anything beyond that. You're going to get real judicious and cut out. And that means eating out. That's got to go because we got we got to clean this mess up and we don't want it to take 10 years. Let's do this in 18 months.
Does that sound better? Yeah. Well, think about this. You got $56,000 in debt, let's say, just using ballpark numbers, and you throw $2,500 a month at this. You're done in 22 months, less than two years. That sounds great, right? Yeah. And we avoid bankruptcy, which is going to implode our life for the next seven years and hurt your ability to get jobs, to rent apartments.
It's going to hurt you in a huge way to file bankruptcy, especially over debts these small.
Yeah.
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Chapter 4: How can Peter build trust with his family regarding finances?
I pay my way. I'm not trying to be worthless in that matter or anything. Why then? I've got a 95 Toyota Tacoma. She's always asking me, why don't I get something else? And I always tell her I can't afford it. Why?
Why don't I just tell her I'm happy with my truck?
i mean yeah what yeah what what's behind all the the pathological lies it was pretty stupid wasn't it is it because you just said it and then once you said it you were like i gotta stick to it now you gotta play this weird character no i mean what is her financial situation is she bad with money is that why are you afraid that if you tell her that you are good with money that she'll start mooching off you
That's what I've had happen in the past.
Ah, so there's some past baggage and trauma, and so you're going, well, I'm not going to do that again. That hurt.
Yes.
And so now I'm going to lie because if she knows I have money, I could get hurt again.
Yes.
Is that a more accurate picture? Because usually behind every lie, there's a fear. There's a lie that you've told yourself long before you lied to someone else.
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Chapter 5: How can I regain trust after financial infidelity?
Listen, I don't mean any harm. You got to separate yourself from the situation. This is going to pull you under dude.
You're going the opposite direction by saying I'm going to work more. So mom doesn't have to work because that becomes enabling.
Chapter 6: What should I do about my son's financial obligations?
Yeah.
And you're going to have to keep that up for the rest of your life because mom's not going to up and get a job 10 years from now if you decide to move out.
Right. And right now you're paying, like to your point, you're paying 60 to 70% of the household expenses. She has no reason. And in her mind, the plan is your sister can go on along, but you're going to live with me until I'm done.
Chapter 7: Should I sell my house to pay off credit card debt?
And that really puts... you in a bad position. If I were your mom, I would be talking to ex-husband.
Chapter 8: What are the next steps for financial recovery?
I'd say, we need to sell this property because I need this $500,000 and I need it in my nest egg so it can grow for me for the next 10 years.
And she still has to work for the next 10 years.
That's right. Oh my goodness.
So, Jacob, we're basically telling you to do everything opposite the way you're headed right now. And it's because we care for you. We care for your mom. We want her to have a great life. And currently her loose retirement plan is going to end up stunting your growth for the next decade or two or three. And so we need to end this codependence right now.
Otherwise, it's going to hurt both of you in the long run. So sorry to hear that, man. This is The Ramsey Show.
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