Jan 19, 2026
If you’re pulling in six figures and still feel like you’re drowning in bills, you’re not alone. One caller to The Ramsey Show makes $126,000 a year and still thought bankruptcy might be his only way out.
But as hosts George Kamel and Jade Warshaw asked more questions, the real issue came into focus: Peter from Philadelphia didn’t actually know how much he owed, had no budget and had little idea where his money was going.
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After reviewing his accounts, he realized the balance wasn’t $25,000. It was closer to $59,000 once forgotten credit cards, a pension loan and old bills were added in.
That’s still a serious amount of debt, but Kamel and Warshaw both pointed out that he earns enough to pay that off. What he needs is a plan (1).
What Jade and George recommend
The first step was helping him see the full picture. As Warshaw put it, once everything is written down, “at least it’s not the boogeyman and all the unknowns.” A budget is simply reality on paper, and for most people, that alone brings relief.
Kamel agreed.
“Once you do this budget, you’re going to figure out your main expenses,” he said (2). “Here’s like food, utilities, housing, transportation, insurance, and minimum debt payments. Anything beyond that, you’re going to get real judicious and cut out.”
Peter admitted that takeout food was eating up more of his income than expected. For many households, dining out is one of the easiest places to overspend.
“Eating out; that’s got to go,” Kamel told him, adding that cutting excess spending may not be fun, but it works faster than bankruptcy and costs less than letting interest build.
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Peter had mentioned bankruptcy early in the call, but the hosts strongly advised against it. With his income, it would do more harm to his financial future than good.
“You are the answer,” Jade told him. “Debt is not a shortcut. It’s not the answer.
Debt is common in the United States. Americans now carry an average of $105,056 in total debt across mortgages, student loans, vehicles, credit cards and personal loans, according to Experian data cited by CNBC (3). Millennials currently hold the highest average balance of $371,864, while Gen Xers lead the way when mortgages are excluded.
Debt is often part of modern life, but letting it grow unchecked is where trouble begins.
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How to get out of debt and avoid bankruptcy
If you’re struggling with similar money pressure, the steps Jade and George recommended can help you build a plan.
Set a budget
Start with your take-home income, then list housing, transportation, utilities, food, insurance and minimum debt payments. Use bank statements instead of memory to track where cash is going. You want a clear picture of your spending so you can retake control.
Cut your spending
Identify categories that consistently creep up, such as restaurants, subscriptions or impulse buys. Trim aggressively, at least until you build momentum. Even small cuts can create extra money to pay down balances faster.
Consider consolidation only when necessary
If you have multiple high-interest balances, a consolidation loan can simplify payments and lower your rate. In more serious situations, debt relief programs may reduce what you owe, but they come with fees and will affect your credit. These should be last-resort solutions, not a substitute for overspending.
Increase your income
Cutting only goes so far. Taking on overtime, side work or selling unused items can speed up progress. Even an extra couple hundred dollars a month makes a noticeable difference.
Debt feels overwhelming when you don’t know where your money is going. But once you track spending, calculate your true balance and build a plan, you can move forward fast. As Jade reminded the caller, the answer wasn’t bankruptcy. It was clarity, discipline and a strategy.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
The Ramsey Show (1); CNBC (2); Experian (3).
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Danielle is a personal finance writer based in Ohio. Her work has appeared in numerous publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love.
