Mar 27, 2026
Kevin, a 30-year-old restaurant manager from Austin, Texas, recently called into The Ramsey Show to ask for advice on recovering from a major, self-inflicted financial setback (1).
He shared with hosts Dave Ramsey and Rachel Cruze that he and his wife had to move into his mom’s house because he lost his $34,000 of savings on penny stocks.
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He wants to get back into his own place, but really isn’t sure what to do now that his savings are gone.
Ramsey was confused as to why Kevin fixated on his lost savings. “There’s no reason you’re at your mother’s if you didn’t lose your job,” he commented. “You just lost your savings.”
Drowning in debt
Kevin then admits that he’s got debt totalling $50,000 for his two cars.
And Ramsey diagnosed his issue immediately: “You have a debt problem, not a ‘I lost money in penny stocks’ problem.”
As Ramsey and Cruze pushed Kevin for more information, they learned that his wife doesn’t work and that Kevin wants to be able to afford to go out to restaurants, have fun, and ultimately escape the lower class.
Ramsey says he can’t get there with $50,000 of car debt and a salary of $60,000 a year after taxes.
“You’re living like you’re making $200,000 a year, and you’re not. And so, you’re going to have to adjust your expectations of how this whole thing works,” Ramsey told him.
This feedback could be pointing to Kevin’s debt as a symptom of “lifestyle creep.” According to Investopedia, lifestyle creep happens slowly as your discretionary income goes up and you start spending more on little luxuries like eating out — so much so that they don’t feel special anymore and simply become a part of your life (2).
Kevin appears to want to live larger than he can afford, which could put him into negative net worth territory. The loss of money on penny stocks suggests his decision-making needs improvement (to say the least), but potential lifestyle creep could have long-term financial consequences as he tries to rebuild his savings.
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Getting back on track
To get Kevin back on track and out of his mom’s house, Ramsey’s advice is to sell the cars and eliminate his debt as soon as possible. They also advised that Kevin’s wife look for work.
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With the debt gone and two salaries coming in, Ramsey said that Kevin and his wife will be able to afford a one-bedroom apartment and buy two reasonably-priced cars for $5,000 each. This could prove challenging, given use-car prices in Austin (3).
Kevin seemed to understand their suggestions, but pushed further for investment advice for after he gets his debt sorted out. Ramsey told Kevin “The number one wealth-building tool you have is your income” and chided him for giving his away to car companies. Instead, Ramsey argued, he should put his savings into reliable investments like basic growth stock mutual funds.
Ramsey regularly recommends these mutual funds and lists them as one of his investing principles on Ramsey Solutions. He strongly recommends them because they “help you avoid the risks that come with investing in single stocks” by spreading your investment dollars out across many companies (4). Ramsey has been criticized widely in the finance press over the years for his fondness for actively managed mutual funds, given how few of them consistently beat the market over time, and the significant fees many of them charge (5).
When Cruze prodded Kevin further, he shared that he is currently paying $1,200 a month for his two cars. Cruze said that if he was investing that money instead, he could be a millionaire when he retires. She calculated that if he starts investing this money now, at age 67 he would have $9.8 million saved, assuming a 12% rate of return.
Cruze closed the call with some words of wisdom we can all use: “To build true wealth is actually very simple. You live on less than you make, you don’t go borrow money, you pay yourself. So you are investing, you are saving, you build an emergency fund, so when something comes up you’re not running to debt.”
If you find yourself bogged down by debt, this advice can apply to you, too.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Ramsey Show via YouTube (1); Investopedia (2); Car Gurus (3) Ramsey Solutions (4); US News & World Report (5)
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Joanna Sinclair is an engagement editor for Moneywise. She holds a B.A. in Professional Writing from York University and has been working in digital media for nearly two decades.
