Personal Finance

I make $170k a year and Dave Ramsey called me broke - here's how I screwed up

Maurie Backman

Published: January 10, 2025 7:44 am

Key Points from 24/7 Wall St.

• A Dave Ramsey caller is asking for help because he’s living paycheck to paycheck despite a high salary.
• He’s about $27,000 in debt but can’t get a handle on it.
• The right tools and mindset could help him change his financial picture.
• Retiring early is possible, and may be easier than you think. Click here now to see if you’re ahead, or behind. ^(Sponsor)

When we think about people who tend to live paycheck to paycheck with serious debt, we might naturally picture lower earners. But that’s not the situation for James, who called Dave Ramsey with a conundrum.

He owes about $27,000 on his credit cards and doesn’t see a way out of that hole. The interesting part, though, is that he earns $170,000 a year.

My first thought when I heard those details was, “Huh. This guy should, in theory, be able to knock out that debt pretty quickly and build up some savings.” But then I realized (and so did Ramsey) that James has one thing working against him — his mindset.

When you become your own worst enemy

James claims that he’s tried things like budgeting apps to get out of debt and nothing has worked. He also just plain feels that he lacks the discipline to stop living paycheck to paycheck. Ramsey, however, thinks he’s largely making excuses.

Now to be fair, James has only been earning $170,000 for six months. He was also out of work during the pandemic, and prior to that, he only made $90,000 a year. But the reason James is struggling on $170,000 a year boils down somewhat to circumstances, and somewhat to bad choices.

The circumstances are that his job effectively requires him to rent two homes because he splits his time between New York and Florida, so spends $3,200 per month on rent all in. He’s also been renting cars to get around more easily, and he’s been helping to cover his girlfriend’s expenses because she’s been out of work.

To cut James some slack, most people don’t have jobs that require them to rent two apartments. So that added expense partially explains why he’s in such a tough spot financially. But the other part boils down to poor choices.

Dave Ramsey has never been one to mince words. And he says that while James is clearly not stupid (if he were, he wouldn’t be making $170,000 a year), he’s made stupid choices. And now he needs to fix his mess.

Getting back on track

Ramsey’s advice to James is to light a fire so he can better focus on the goal of paying off his debt. In fact, Ramsey told him “pretend like you need $27,000 by Christmas or you’re going to die.” He also told James to stop subsidizing the girlfriend’s lifestyle, stop renting cars, and get a cheaper home in New York, even if it means a longer commute.

All told, his advice is for James to turn his shame into positive financial changes. And I agree there. But there’s one thing I wish Ramsey would’ve told James, and it’s to find himself a financial advisor who can help him get back on track.

James knows he’s in a bad place, and he admits that he has a tendency to make poor financial decisions. This tells me that he needs outside help — someone to sit down with him, review his expenses and debts, and come up with a payoff plan.

Now I want to be clear that I am not a certified financial advisor or planner. But I’ve helped a number of friends in similar situations fix their finances through tough love.

If James and I were friends, I’d sit him down and make a spreadsheet of all of his bills. I’d then set a realistic goal for paying off $27,000 in credit card debt — maybe not this Christmas, but next Christmas — and show him how much he needs to save each month to make that happen. I’d also run some calculations to show him how much his balances are costing him.

Unfortunately for James, we don’t know each other, so I can’t offer that sort of help. But for that reason, I think he — and anyone in a similar boat — should sit down with a financial advisor and work up a game plan. A little hand-holding plus a change in mindset could lead to a much more favorable financial picture.