• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Safe on paper

Cole and his wife have borrowed money in a few ways, but none of their debts are extreme.

The hospital payment plan is a $222 monthly payment. Their outstanding credit card balances total $14,000. They owe $10,700 in auto loans on two cars, one of which was due to be sold. Cole’s wife has $30,000 in student loan debt, while their house has a mortgage of $102,000.

None of these amounts is above average. As of the third quarter of 2023, the average loan amount for a new vehicle is $40,184, while a used car has an average loan of $27,167, according to Experian.

The average mortgage balance per household was $241,815 in the second quarter, while the average federal student loan balance is $37,718, according to the most recent figures from the Education Data Initiative.

Meanwhile, Cole and his wife earn a solid income, with Ramsey pointing out “$112,000 is no slouch in Wichita, Kansas, dude.”

On paper, the couple’s debt should be easily manageable. However, Cole claimed they’re falling behind on payments at a rate that going into overdraft seemed “inevitable at this point.”

“You guys must be some of the most disorganized, completely chaotic people that I've run into in a while,” Ramsey said. Fortunately, he saw an easy path out of this mess.

Kiss Your Credit Card Debt Goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Explore better rates

Four strong walls

Ramsey encouraged Cole to prioritize spending on essential items first. The couple need to spend on food, utilities, housing, cars and fuel before they consider anything else. It’s a budgeting strategy Ramsey calls the “four walls.”

“You take care of the four walls of your house,” he said. “The necessities of life: food, shelter, clothing, transportation, utilities, gas in the car, and everything else can wait.”

Based on these priorities, creating a robust budget shouldn’t take longer than an hour and a half, Ramsey estimated.

“You’re going to turn around so fast!” he said.

The simple takeaway from Cole’s predicament is that budgeting is a powerful tool that’s too often overlooked. A survey by Credit.com found that 27% of Americans don’t think a budget is necessary, while 24% believe they won’t stick to a budget even if they had one.

Fundamentally, a budget requires people to actually be aware of what they make, what they spend, and have a plan to reconcile the two. For something as important as a family’s finances, playing fast and loose can land you in trouble for no good reason.


This 2 Minute Move Could Knock $500/Year off Your Car Insurance in 2024

Saving money on car insurance with BestMoney is a simple way to reduce your expenses. You’ll often get the same, or even better, insurance for less than what you’re paying right now.

There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.


The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.