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A caller to The Ramsey Show astounded the hosts recently when he declared that he and his wife were $1 million in debt.
“I’m in big financial trouble,” he told hosts of “The Ramsey Show”. “We owe over $1 million all in together, including mortgage.”
To put his problem in context, the average American consumer holds $105,056 in debt, according to Q3 2024 data from credit bureau Experian – up 2.4% from the previous year. However, that number is skewed by some households that have far higher debt balances.
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The caller, identified as Robert from Chicago, Ill. is clearly in that group of outliers.
Robert’s troubles are amplified by the fact that a significant portion of his debt is from personal loans. He made loans to others against his credit as an attempt at investment, only to have his debtors stop paying him. Co-hosts Ken Coleman and Jade Warshaw were in disbelief, with the latter describing the situation as “ridiculous.”
Trying to be smart
“So here’s the thing,” Robert said. “I’ve been trying to be smart and it didn’t quite work out. I was in a position where I could lend money to guys who need it and make profit on it. So I would throw money on a card … and I’ve been making some profit on it.”
Robert’s income was no match for his debt. He has a $462,000 mortgage, $96,000 in private student loans and $42,000 in auto loans. By comparison, the average consumer had a $252,505 mortgage, $35,208 in student loans and $24,297 in auto loans, according to Experian.
Borrowing money to invest in private loans is significantly risky and can come with legal implications.
Instead of going this route, those in Robert’s situation can speak with a financial advisor, who can help make a plan towards paying off debt — without seeking out private loans.
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Read more: US car insurance costs have surged 50% from 2020 to 2024 — this simple 2-minute check could put hundreds back in your pocket
Tough choices ahead
“There’s no breathing room here,” said Jade Warshaw, co-host of The Ramsey Show. “You guys are about to work your booties off… There’s no other way.”
Despite their combined monthly income of $10,000, Robert and his wife find themselves unable to effectively manage his million-dollar debt pile, according to "The Ramsey Show" co-hosts.
The hosts advised Robert to sell his house, car, and even the solar panels he had recently invested in for his home. His wife was also advised to upgrade her part-time job to a full-time job, and both were advised to look into side hustle income. The hosts recommended the couple make major sacrifices to pay down the debt, all while reminding Robert that the process wouldn’t be easy.
Robert estimates his house is worth $600,000, while his equity in it is somewhere between $120,000 to $130,000.
If you’re looking to explore avenues for increasing your real estate investment returns, it’s time to consider First National Realty Partners (FNRP) and mogul.
FNRP provides accredited investors access to necessity-based commercial real estate, including institutional quality, grocery anchored investments.
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“The good news is you can course-correct, and you can right this ship,” said Jade Warshaw. Setting Robert up with a strict but realistic plan, they advised financial coaching, a good budgeting tool, and liquidating as many assets as possible to pay down debt quickly.
Suppose you want to increase your income and diversify your investment portfolio. You can tap into this market by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
To get started, simply browse through their selection of vetted properties, each picked for their potential appreciation and income generation. Once you choose a property, you can start investing with as little as $100, potentially earning quarterly dividends.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.