Shayna is pregnant, working two jobs and heavily in debt, but she’s thinking about buying a new car. She lives with the baby’s father but they’re not married. When she called into The Ramsey Show recently, Shayna got some tough life advice.
“So you’re going to continue to play married couple but not combine finances, have zero support, and just basically do all this on your own while being a new mom?” asked George Kamel, an expert on the show. Shayna is not primarily facing a car problem or a debt problem, Kamel said. The real problem is that her household functions like a partnership but operates like two strangers splitting a hotel bill. The show host advised: Have a direct conversation with her partner about combining finances, even informally, before the baby arrives in August.
Why Separate Finances Are Costing Shayna More Than She Realizes
Shayna earns $65,000 annually, but her take-home pay is reduced by garnishment from a credit card judgment. Her partner works two jobs bringing in $40,000 to $60,000 annually. That is a combined household income with real capacity, yet Shayna is navigating debt repayment and a coming baby.
Wage garnishment typically takes a fixed percentage of disposable income, meaning Shayna’s effective monthly cash flow is already reduced before she pays a single bill. On top of that, Shayna has about $12,000 in student loans and another $7,000 in payday loans. Layering payday loan debt, which carries triple-digit annual interest rates in most states, on top of a garnished paycheck, creates a cash-flow trap: money leaves before she can direct it. The payday loans likely carry interest rates that make the balance grow faster than minimum payments shrink it.
So what should she do? First of all, she shouldn’t buy a new car. “Do you think taking on another car payment that’s even bigger is going to help in any way, shape, or form to help you get out of this mess?” co-host Ken Coleman asked.
Kamel suggested she start tackling the debt first. “Let’s get real clear on that credit report,” he said. “Let’s lay them out smallest to largest, and then you’re going to make a budget for the first time.” Shayna should cover only “your four walls right now: food, utilities, shelter, transportation.” Everything else goes to debt reduction.
During the call, Shayna also revealed that she doesn’t have insurance on her current vehicle. “You are putting yourself at huge risk,” Kamel warned. “I would cut everything down to the bone before I went without insurance.”
Driving an uninsured vehicle worth approximately $5,000 while pregnant exposes Shayna to liability that could dwarf every debt she currently carries. A single at-fault accident without insurance can result in a judgment that triggers additional wage garnishment,
Kamel closed with encouragement: “We’re rooting for you. We’re not trying to be harsh on you. We’re trying to give you the reality so you can face the facts and then take the proper next steps.”
Top Gaining Stocks
Top Losing Stocks