Mar 27, 2026
Faced with a tough financial situation, a New York City couple made a massive sacrifice in order to chip away at their debt.
As Hannah explained to the hosts of The Ramsey Show, she and her husband were awaiting the birth of their child about a year ago when they decided to move out of the apartment they were renting. Their new home, however, was far from typical (1).
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“My husband and I own a gym here in New York City,” Hannah shared with cohosts Rachel Cruze and George Kamel. “About a year ago, right before I had our baby, we decided to move into the basement of the gym.”
This move allowed the couple to ditch their rent payments and put that money toward debt. And while they were able to pay off $70,000 of debt in the last year, they still have about $120,000 left to pay down. Meanwhile, their current living situation is not exactly ideal for raising a child, nor is it entirely legal.
“‘It is not zoned for it [housing],” said Hannah.
Kamel and Cruze quickly warned Hannah that while getting rid of debt is important, it’s even more important to do so legally without taking on unnecessary risk.
‘Well, that poses a problem’
Before they moved, Hannah and her husband were paying $3,000 a month for a small apartment in the city.
By cutting out rent completely, they were able to aggressively pay down debt. And while it’s been working, their remaining debt includes $40,000 in credit-card debt and $80,000 in student loans.
Related: A realistic exit strategy for credit card debt
Meanwhile, their gym business has been flourishing. Hannah revealed on the show that monthly revenue jumped from $40,000 to about $65,000, which allowed the couple to take home $10,000 to $15,000 a month after previously paying themselves almost nothing. But the legal gray area that is their current living situation immediately raised red flags for Kamel.
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“Well, that poses a problem,” said Kamel. “I mean, one is the actual legal implications. Another one's just the integrity of the situation on top of the risk that you're putting yourself in, especially with a baby.”
Hannah said inspectors had already visited the gym after someone reported them, but even though she and her husband got the clear, Cruze and Kamel warned that continuing to live there indefinitely could still create problems. Cruze even pointed out that waiting until the situation becomes forced could backfire.
“Eventually you're going to have to move,” said Cruze. “So I think I would rather be on the proactive end of you all choosing than versus, I don't know, getting fined or something found out.”
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How small businesses can stay ahead of the game
This couple’s story is an example of a common situation for many small business owners: balancing debt repayment with financial stability.
Traditional personal finance advice, including Ramsey’s “debt snowball” method, typically assumes the person in debt has a stable income. However, entrepreneurs typically have more volatility in their financial situations than those with traditional nine-to-five jobs.
Gym owners like Hannah also face unique challenges with their business models. Gyms typically operate with high fixed overhead because of rent, equipment, staffing and seasonal membership swings, not to mention a natural sensitivity to the state of the economy.
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When you add the costs of raising a newborn in one of the country’s most expensive cities, the margin for error can quickly shrink. Kamel and Cruze told Hannah that paying off debt should remain a priority, but sacrificing stability and safe housing doesn’t have to be part of the plan.
With $10,000 to $15,000 in monthly take-home income, Kamel pointed out the couple could afford rent while still making progress on their debt, even if they paid around $4,000 a month for rent.
“The goal is to keep it [rent] around 25% of your take-home pay, which I understand [in] a very high cost-of-living area like New York City, it might be a little over the parameter. But the goal is to not have 50% of your take-home pay going to rent,” said Kamel.
The plan that the cohosts came up with called for Hannah and her husband to continue to live frugally, move into an apartment and use the debt snowball method to pay off remaining debt. The debt snowball approach requires paying off debts in order of smallest balance to largest, which allows the debtor to gain momentum as they pay off each balance.
This couple’s extreme sacrifice of living in their gym to fast-forward debt payoff reflects the kind of commitment many entrepreneurs make in the early stages of building a business, but their situation highlights that financial progress shouldn’t come at the expense of legal or personal stability.
For business owners trying to eliminate debt quickly, financial experts recommend putting aside a business emergency reserve, which will allow you to do the following (2):
Plan for the unexpected
Running a small business often means having to face surprises that force you to quickly adapt, so having some cash on hand can make the difference between starting a debt cycle or being able to run the business as usual.
Plan for what you know
If your business is seasonal, building up a cash reserve can help pad your account during downtimes. Even if it’s not seasonal, if there are looming financial events on the horizon, like a recession or an economic downturn, you’ll be ahead of the game.
Be consistent
If you set up automatic deposits, the money in the reserve fund will build up steadily in the background and you can budget around it. If you come across a financial windfall, you can decide to add more to your reserve than the automatic amounts to help bulk it up.
Article sources
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The Ramsey Show Highlights (1); Bank of America (2).
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Jessica is a freelance writer with a professional background in economic development and small business consulting. She has a Bachelor of Arts in Communications and Sociology and is completing her Publishing Certificate.
