Despite a household income of $200,000, a couple wondered if an $800,000 home was holding them back financially.
Jessica, 28, told “The Ramsey Show” that she and her husband have been budgeting for years but continued to carry debt because the payments felt manageable. The couple has a home valued at up to $850,000 and owes about $480,000 on the mortgage.
“We’ve always held a debt,” Jessica said. She wondered if selling the house, renting for a while, and using the equity to pay off balances and rebuild savings would be the right move.
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After reviewing the numbers, a personal finance expert Dave Ramsey rejected that approach. “I quit a couple of $200,000 a year dirty freaking brats,” he said, reacting to how the income was treated along with the ongoing debt.
Jessica said their balances include about $70,000 on a home equity line of credit, about $70,000 in two vehicle loans, and a $16,000 camping trailer. One vehicle carries a monthly payment of about $700, while the other is about $600.
“You make too much money to be broke,” Ramsey said, pointing to the difference between earnings and results.
Jessica also mentioned plans to move to Utah, though not for another four to five years. She said her husband’s parents live just down the street and help take care of their child while she and her husband are at work, making an immediate move difficult.
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Ramsey said that selling the house now and renting it doesn’t make sense considering the time. He told Jessica that the house itself was not causing the problem and warned that paying off the debt without changing habits would likely cause the balances to return.
Co-host Jade Varshaw she added that high income can create what she called “skinny fat” finances, where things look stable on the surface but weaknesses remain underneath.
“Just because she looks healthy doesn’t mean she actually is,” she said.
Ramsey said the couple could put about $10,000 a month toward the debt and be done in about 14 months. That plan would require her to cut discretionary spending and sell non-essential items, including the trailer, but keep the house.
“This process of 14 months of sacrifice, you will never be the same,” said Ramsey, adding that the sale of the house does not change the behavior.