Mary from San Bernardino, California, is one month into following financial advice from The Ramsey Show, and although she’s already completed step one of Dave Ramsey’s baby steps, she finds herself facing pressure due to her debt.
She shared with hosts Jade Warshaw and Ken Coleman that she has $9,000 in collections and $10,000 in active student loan debt, and recently got a call from a debt collector demanding payment on a $6,000 balance and threatening legal action.
Instead of panicking, Mary used a line she heard on the show: “My financial advisor told me I might file bankruptcy, so if I do, you’ll get the call. Remove me off your call list.” Then she hung up.
The call left her rattled. She wasn’t sure if she’d gone too far or just stood her ground. So she called into The Ramsey Show for help. Here’s what the hosts had to say, and what they told her to do next.
Don’t miss
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 6 of the easiest ways you can catch up (and fast)
- Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
- Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
How Mary handled the threat, and what the hosts think
Co-hosts Jade Warshaw and Ken Coleman applauded her efforts.
“What you essentially told them is I don’t have the money that you’re asking for and I’m broke. And so, if you think you’re going to get that money from me, you’re wrong,” said Warshaw.
Warshaw expanded, “Credit card companies do sometimes sue you. But it takes a long time to get to that step.”
After confirming that she did the right thing, the hosts offered to coach her through their next steps.
Read more: You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how
Moving beyond the threat
Mary shared that she now has a $261 monthly surplus after sticking to her budget. The hosts recommended she use that surplus to work the debt snowball plan, which involves paying off her smallest debt first and working her way up from there.
Mary mentioned that she’d sent a money order of around $450 to pay down her debt in collections, but Warshaw advised against continuing that plan.
Instead, Warshaw suggested that Mary pause those payments and save up around $5,000 to offer a lump-sum settlement on the $6,000 debt in collections. This approach could help her clear the balance for less than she owes.
“That is what you do with debt in collection, you settle it,” said Warshaw.
Beyond that, Mary is already taking proactive steps to grow her income. She recently launched a nutrition and meal prep business, earning $2,040 per month — with plans to expand.
Warshaw left her with these encouraging words: “You’re capable of far more than you ever thought possible.”
For others in a similar position, the path forward includes more than just budgeting. The hosts recommend focusing on a few key steps:
- Stick with the debt snowball method
- Pause payments on collections and negotiate a lump-sum settlement
- Freeze any new credit card use
- Grow income through side work or entrepreneurship
- Build a 3- to 6-month emergency fund after debts are repaid
By staying focused and strategic, Mary, and others like her, can dig out of debt for good.
What to read next
- Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
- Here are the 6 levels of wealth for retirement-age Americans — are you near the top or bottom of the pyramid?
- Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
- How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
Money doesn’t have to be complicated — sign up for the free Moneywise newsletter for actionable finance tips and news you can use. Join now.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
