'We owe over $1 million': A Chicago man who tried to be a private lender is now in 'big financial trouble.' Shocked 'Ramsey Show' hosts respond
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A caller to The Ramsey Show astounded the hosts recently when he declared that he and his wife were $1 million in debt.
“I’m in big financial trouble,” he told hosts of “The Ramsey Show” last year. “We owe over $1 million all in together, including mortgage.”
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To put his problem in context, the average American consumer holds $104,215 in debt, according to Q3 2023 data from credit bureau Experian. However, that number is skewed by some households that have far higher debt balances.
The caller, identified as Robert from Chicago, Ill. is clearly in that group of outliers.
Robert’s troubles are amplified by the fact that a significant portion of his debt is from personal loans. He made loans to others against his credit as an attempt at investment, only to have his debtors stop paying him. Co-hosts Ken Coleman and Jade Warshaw were in disbelief, with the latter describing the situation as “ridiculous.”
Trying to be smart
“So here's the thing,” Robert said. “I've been trying to be smart and it didn't quite work out. I was in a position where I could lend money to guys who need it and make profit on it. So I would throw money on a card … and I’ve been making some profit on it.”
Robert’s income was no match for his debt. He has a $462,000 mortgage, $96,000 in private student loans and $42,000 in auto loans. By comparison, the average consumer had a $244,498 mortgage, $38,787 in student loans and $23,792 in auto loans, according to Experian.
A debt consolidation loan through Credible could actually save you money. Credible is a free online service that shows a marketplace of vetted lenders who can help you pay down your personal loans fast. You can borrow up to $200,000 with no collateral at interest rates as low as 6.99% APR.
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Tough choices ahead
“There's no breathing room here,” said Jade Warshaw, co-host of The Ramsey Show. “You guys are about to work your booties off... There's no other way.”
Despite their combined monthly income of $10,000, Robert and his wife find themselves unable to effectively manage his million-dollar debt pile, according to "The Ramsey Show" co-hosts.
The hosts advised Robert to sell his house, car, and even the solar panels he had recently invested in for his home. His wife was also advised to upgrade her part-time job to a full-time job, and both were advised to look into side hustle income. The hosts recommended the couple make major sacrifices to pay down the debt, all while reminding Robert that the process wouldn’t be easy.
Robert estimates his house is worth $600,000, while his equity in it is somewhere between $120,000 to $130,000.
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“The good news is you can course-correct, and you can right this ship,” said Jade Warshaw. Setting Robert up with a strict but realistic plan, they advised financial coaching, a good budgeting tool, and liquidating as many assets as possible to pay down debt quickly.
Suppose you want to increase your income and diversify your investment portfolio. In that case, Arrived offers the opportunity to invest in shares of rental and vacation properties without the burden of being a landlord.
Backed by world-class investors, including Jeff Bezos, Arrived offers flexible investment amounts starting as low as $100 and caters to both accredited and non-accredited investors. Simplify your access to this inflation-hedging asset class to invest without the extra legwork.
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