When Cathy called into The Ramsey Show, she was already six months into a nightmare. The 68-year-old from Texas admitted she had gotten involved with an “online investment group” and wound up losing everything. (1)
She retired from her job of 36 years and cashed out her entire 401(k) and pension — handing over $487,000. In addition, she borrowed $50,000 from her brother, who also invested $110,000 of his own money.
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"Last month they ghosted us and froze our accounts, and we lost it all," Cathy said in a clip posted Oct.16.
Now, she’s jobless with nothing but the $2,000 she gets in Social Security each month, which barely covers her expenses. She does have a paid-off home worth about $400,000, but also $33,000 in debt and an angry brother who wants his money back.
Where does someone like Cathy go from here?
The harsh reality check
Co-hosts George Kamel and Ken Coleman didn’t sugarcoat Cathy’s situation. On her brother’s demand for repayment, Kamel suggested he’s on his own.
“The promises are over,” he said. “You both got screwed in this and you just simply don’t have the money to pay him back.”
As for tackling her debt, the co-hosts advised Cathy to focus on generating income rather than take a drastic measure like declaring bankruptcy or tapping into her home’s equity. Cathy says she’s applied for sales jobs, her old field of work, but the co-hosts suggested she expand her search to areas she wouldn’t normally have considered, including retail and food service.
Liquidating the home should be a last-resort option, according to Kamel. If Cathy finds herself unable to work in a few years, she can sell the property, downsize and invest the difference to create a small nest egg for herself.
Read more: 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
Warning signs of investment fraud
Cathy’s story isn’t isolated, as investment scams have exploded. In 2024, consumers lost $5.7 billion to investment scams — 24% more than in 2023 — according to the Federal Trade Commission (FTC).
Investment scams often promise you’ll make big money easily and quickly with little risk to you. “Pig-butchering scams” have become particularly common, where scammers develop relationships with victims over time before suggesting supposed high-return investments, frequently involving cryptocurrency.
The FTC has identified some common investment fraud red flags:
- Guaranteed profits with no risk: All legitimate investments carry risk
- High-pressure tactics: Scammers demand immediate action to prevent due diligence
- Vague details: Lack of specific documentation is a major warning sign
- Secret methods: Claims of proven systems for easy money
So, before you decide to invest money, be sure to take the time to think it through and avoid committing too quickly. You can start by researching companies online for reviews. It’s also important to verify claims independently using the Security and Exchange Commission’s (SEC) search tool at Investor.gov, and check if investment professionals you’re considering working with are licensed or registered.
What to do if you become victim of a scam
The harsh reality is that recovering money from investment scams is extremely difficult, and many victims never recover their losses. But there are steps you can take to try getting back as much as possible.
Be sure to cease contact with the scammers to prevent further loss. If you’ve given them information to access any sensitive accounts, change passwords immediately and inform the institution.
The Financial Industry Regulatory Authority (FINRA) also recommends:
- Report to authorities: File complaints with the SEC, FINRA, FTC and the FBI’s Internet Crime Complaint Center, along with law enforcement
- Document everything: Include all related details, contact information, communications and transaction records. If there’s a chance of recovery, you may need this information
- Find support: if you’re experiencing feelings like guilt, shame, depression or embarrassment, lean on friends and family, or seek out a support group or a professional
For Cathy, the path forward likely means accepting her retirement as imagined is gone. Her best chance at success at this point may simply be to return to the workforce and live frugally.
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The Ramsey Show Highlights (1)
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