When your mortgage consumes most of your take-home pay, every bill becomes a source of stress — and every month feels like survival mode, not financial progress. Lacey from Jacksonville, Florida called in to the Dave Ramsey show with this exact problem and wasn’t sure what to do next.
"I purchased my home for around $400,000 at the beginning of 2024. With the interest rate, it’s not really affordable. I thought that I could refinance. I make a good salary, but I’m living paycheck to paycheck, unable to pay the debt that I have. It’s kind of just there hanging around, not going anywhere, and I just want to get out of this house, but I don’t really have a solution to remedy this poor financial decision," Lacey explained. (1)
Lacey told The Ramsey Show that her housing payment was $3,100, and her other debt payments for things like her car, credit cards and student loans cost her another $1,000 monthly. She has PMI on the mortgage since she took an FHA loan, and she’s added the credit card debt since she made the purchase.
With a take-home pay of just $5,600 per month, nearly 75% of her income is already spoken for before groceries, gas, utilities or savings are even factored in. She also lives with her boyfriend, who contributes only a small amount toward expenses, and she doesn’t view the relationship as long-term.
The Ramsey Show hosts say this situation isn’t just tight — it’s financially dangerous. Here’s their advice, and what anyone struggling with house payment needs to hear.
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Why the Ramsey Show says selling is the only viable option
Rachel Cruze didn’t mince words.
"You can’t afford this house," Cruze said. "This house is killing you, and I know you know that. I would sell it, hopefully as soon as possible… You may take a small loss, but that is going to be so worth it because it’s going to free up your income. You have to start attacking this debt."
Cruze emphasized that staying in the home is preventing Lacey from making any financial progress — she’s stuck in a cycle where every dollar is going to debt servicing instead of debt elimination, emergency savings or retirement.
Ken Coleman added another crucial point: this isn’t just about housing — it’s about reclaiming financial control. He advised Lacey to sell the house, end the financial entanglement with her boyfriend and use her strong earning potential as a nurse to aggressively pay down debt once the mortgage payment is gone.
But what if selling causes her to owe money?
Because Lacey bought recently and hasn’t paid down much of the principal, she may owe more on the mortgage than a buyer would pay her for the home. If she sells at a loss, she has two primary options:
- Short sale: Selling for less than she owes and asking the lender to forgive the difference. This requires lender approval and can damage her credit and limit her ability to buy another home for years.
- Covering the shortage with cash: Selling the home and bringing money to the closing table to pay off the remaining mortgage balance. This preserves credit health and ends the financial strain more cleanly.
Cruze recommends the latter, pointing out that Lacey has a strong income and could likely generate the needed funds quickly by working overtime. In other words, short-term sacrifice may be the only way to regain long-term financial stability and control over her money.
What if you can’t afford your mortgage — and selling isn’t possible yet?
If you’re in a similar position but unable or unwilling to sell immediately, there are steps you can explore to improve your cash flow and avoid default. These include:
- Refinancing, which could make sense if you could qualify for a lower interest rate than you have as this would make payments more affordable
- Working out a payment plan with the lender, which could give you more breathing room in your budget, but which could potentially damage your credit, and which may not be possible depending on whether her lenders think you’re actually facing hardship.
- Reducing the payments on other debt. If you have other expensive debt, such as credit card debt, you may be able to refinance that to lower monthly payments. A personal loan or balance transfer could be a good option.
- Exploring all your payment options for some types of loans. If you have federal student loans, you may have many ways to reduce your payment, including choosing an income-driven plan or putting payments temporarily on pause through deferment or forbearance
- Finding a roommate to help you cover housing costs so you can pay your mortgage more easily
Deciding whether it’s time to sell often comes down to one key question: Is your home helping you build wealth, or is it holding you back financially? If your mortgage payment eats up more than 30% of your take-home pay, you can’t pay down debt or save anything month to month, or you’re relying on credit cards or personal loans just to cover basic expenses, those are clear signs that your housing costs are unsustainable.
The strain may also spill into other areas of your life — limiting your ability to build an emergency fund, plan for retirement or even afford everyday necessities. Selling can feel like a setback, but in many cases, it’s the most powerful way to regain financial control and create a foundation for long-term stability.
Selling, even at a loss, may be the very decision that puts you back on track to financial freedom. Whether you choose to sell, refinance or reduce other debt, the most important step is acknowledging the situation and taking decisive action — before your finances dictate your future for you.
Read more: Ultra-rich Americans are ditching stocks and real estate, says this investing legend — 5 assets they’re using to shockproof their millions
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The Ramsey Show Highlights (1)
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