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How bad is their debt situation?

During the call, Adam gave a brief overview of his household’s financial situation. Despite having a home with about $400,000 in equity, Adam said his family was roughly $800,000 in debt — a staggering figure that, even if interest free and paid off at $4,000 a month, would take them close to 17 years to erase.

Here's how that staggering sum breaks down:

On top of their debt situation, the family only had $10,000 in savings at the time of the call. Considering their lifestyle and their regular loan payments, that sum is hardly likely to carry them through the recommended three to six months worth of expenses.

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Where do they go from here?

As Cruze sees it, Adam and his wife have a few options: "You could sell your home, take $400,000, wipe this all clean.” But she wasn't a fan of that solution.

"There's gonna be no change in this process," she said, "and mathematically, you don't need to sell your house: You guys just need to get your crap together."

Here are the three steps Cruze, a financial coach, and her co-host Delony, a mental health expert, outlined for Adam to get back on track:

  • Sell both cars and downsize, even if the vehicles are “underwater.”
  • Slash the household budget to $75,000 a year (or $6,250 a month).
  • Use what’s left each month to pay off all debts, starting with the smallest up to the largest.

By the hosts' estimate, following this plan would result in Adam's household being debt-free in 12 to 18 months.

That being said, depending on the interest rates Adam has on his various loans, he might be wise to follow the avalanche debt repayment strategy over Ramsey’s preferred snowball approach. The avalanche approach would see Adam and his wife tackle the debt with the highest interest rate, while making minimum payments on the rest, with an aim of saving themselves paying more in interest.

Another thing to note: If Adam and his wife have federal student loans, they're likely paying relatively low interest rates. In that situation, they might consider bolstering their savings while repaying their student loans. Rather than eliminating low-interest debt (below 6% APR) ahead of schedule, they’re likely to experience a bigger financial payout by choosing to invest in their retirement or even a 529 college savings plan for the kids.

Finally, as with everything personal finance related, the right answer is personal. Depending on market conditions and what’s going on in their lives, Adam may still want to consider downsizing his home. But even for a rich broke guy, there’s power in knowing your options.

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Sarah Brady Freelance Contributor

Sarah Brady is a (self-)certified money nerd. She's a personal finance writer and speaker who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written for Forbes Advisor, USA Today's Blueprint, FORTUNE, Experian, Investopedia and more,


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