I'm $100,000 in Debt! (Truck, Mower, Student Loans, etc.)
7th February 2024 | ⏰ 00:05:19
I'm $100,000 in Debt! (Truck, Mower, Student Loans, etc.)
TLDR: Logan and his wife realized they had been neglecting their finances and wanted advice on what to do with their 2008 Toyota Tundra. They owe $19,000 on the truck, which is worth $17,000. Logan's total debt is $100,000, including a student loan, a mower, and the truck. His household income is $63,000 but will increase to $73,000 in May. Dave suggested Logan sell the mower and consider selling the truck if it hinders his ability to become debt-free within two years.
Dave Ramsey's Financial Advice to Logan
The Dave Ramsey Show Transcript
Caller: Logan from Texas
Dave Ramsey: Logan, what's up?
Logan: Hey Dave, how are you?
Dave Ramsey: I'm doing great. How are you today?
Logan: I'm better than I deserve.
Dave Ramsey: What's up?
Logan: Well, we just kind of realized, oh, probably about a month and a half ago, that we had been doing Dave-ish for too long and kind of gotten gung-ho and finally got gazelle intense. And in doing so, I'll kind of secret advice of my dad and father-in-law. It was actually a pastor as well. And wanted to kind of get your intake on an input on something that they told me about a truck that I have. The truck is a 2008 Toyota Tundra that is I think we owe right now right at 19,000 on it. I think that it Kelley Blue Book's for private sell right at 17. It is not the next step in our baby step, but I'm just trying to decide what I need to do if I need to sell it or try to just hold on to it because you're a reliable truck.
Dave Ramsey: What's your household income?
Logan: It's currently 63,000. In May, in May it will go up to 73,000.
Dave Ramsey: And what's the other car that you have worth?
Logan: The other car is probably worth $1,000. It's our Houki.
Dave Ramsey: Okay. And you have any other vehicles?
Logan: No, sir.
Dave Ramsey: Okay. And how much a debt do you have not counting your house total? You have 19 on the truck. What else?
Logan: Yeah, that's right. Unfortunately right now it's totaling right at about a hundred. That's seven thousand in student loan debt, the truck. We I have a mower that I financed to start a mowing business thinking that was going to be a good plan. That'd be a video right there.
Dave Ramsey: Yeah. Well, go on the mower and 32-hundred.
Logan: Your mower is nicer than your second car.
Dave Ramsey: Yes, yes. You are. You are correct. Are you a are you using it? Are you making any money with it?
Logan: I actually was on my way right now to go to go and do a couple extra mowings before before that.
Dave Ramsey: So what are you making a year worth of mower?
Logan: So I only did I started this year with it and so what you're making Union I made it I'm making probably about fifty-five hundred dollars.
Dave Ramsey: You use it much? I didn't know that's right. Okay. You need to sell it okay. Cause you're not using it.
Logan: Yes. Okay. And so that gets rid of that debt now the the rule of thumb I use on vehicles is if all of your vehicles added together equals more than half your annual income, then you've got too much tied up in things that go down in value. You're close, but you're not there. Especially with your raise coming up the second rule of thumb I use is can you be debt-free within two years except your home if you live on a beans-and-rice budget. And if not is the car the reason and this one's on the bubble. The trucks on the bubble then yet they're okay. So can you pay off fifty thousand dollars making the kind of money you're making a year for two years? That's beans and rice and that's picking up some kind of extra job right?
Logan: Yes, sir. And I actually have my my real estate license and so I'm currently tied up in another schooling for my full-time job and so as soon as that frees up my time then I will all be getting back into real estate.
Dave Ramsey: I mean that's but you're not bad hustle well after your raise you're supposed to be making how much again and right at 73?
Logan: Yeah, paying off fifty a year out of that's not going to work. No, sir.
Dave Ramsey: So if the truck allows you to do that I might sell the truck or if you gave if you you know if you can make twenty thirty thousand to in real estate a year apart which you probably can do if you hustle all right then the truck might be a keeper it's borderline but uh the bottom line is we got rid of the truck you could be out of debt in two years.
Logan: Yes, sir. That changes the formula to thirty-five thousand or thirty or I'm sorry forty thousand a year rather than fifty thousand a year.
Dave Ramsey: Yes, sir. So it's yeah it's more doable then and and it's it's not a crazy it's not like if the truck was twenty thousand I would I mean if the truck was forty thirty thousand I just instantly say sell it in this scenario because it'd be too high percentage of your income and it'd be the problem with your situation but the problem with your situation is you just hadn't got started good on it yet and so I'm gonna keep it for right now and I'm gonna attack into this and if you look up and realize it's the blocker then you can cut it loose later.
##FAQ: Q: What led you to realize that you had been doing Dave Ramsey's teachings inconsistently?
A: Logan and his wife recognized around a month and a half ago that they had been implementing Dave Ramsey's principles inconsistently. They realized that they had become complacent and needed to reignite their focus and intensity in following the Baby Steps.
Q: What was the advice given by Logan's father and father-in-law regarding his 2008 Toyota Tundra?
A: Logan's father and father-in-law, both of whom are pastors, provided him with advice regarding his 2008 Toyota Tundra. They encouraged him to consider selling the truck, as it was not the next step in their Baby Step plan. They also advised him to evaluate whether keeping the truck was necessary or if it was hindering their progress toward becoming debt-free.
Q: What is Logan's current household income, and what are his other vehicles worth?
A: Logan's current household income is $63,000, which will increase to $73,000 in May. His other car, a Hyundai, is worth approximately $1,000. He does not have any other vehicles.
Q: How much debt does Logan have, excluding his mortgage?
A: Excluding his mortgage, Logan has a total of $100,000 in debt, which includes $7,000 in student loan debt, $19,000 owed on his Toyota Tundra, $3,200 owed on a lawn mower he financed, and other miscellaneous debts.
Q: What is Dave Ramsey's rule of thumb regarding vehicles and debt?
A: Dave Ramsey typically recommends that the total value of all vehicles owned by a household should not exceed half of their annual income. Additionally, he suggests that individuals should aim to become debt-free, excluding their home mortgage, within two years by following a strict budget and potentially taking on extra work.
Q: Can Logan realistically pay off $50,000 in debt within two years on his current income?
A: Based on his current income, paying off $50,000 in debt within two years would require significant sacrifices and a strict budget. However, if Logan were to follow a "beans and rice" budget, which involves cutting back on unnecessary expenses and living frugally, and supplement his income with a part-time job or side hustle, it might be possible.
Q: What are Logan's options regarding his Toyota Tundra?
A: Logan has two main options regarding his Toyota Tundra. He can either sell the truck, which would allow him to eliminate the debt associated with it and free up cash flow, or he can keep the truck if it is essential for his work or lifestyle and if he is confident that he can pay off his debt within two years.