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Get a handle on your situation

Remember: All debts aren’t created equally. The first thing Ramsey asked the caller is to break down what categories of debt she was holding. As it turns out, she had a mix of secured and unsecured debts, including a mortgage, student loans and a hefty credit card balance.

It was the $100,000-plus credit card balance that alarmed Ramsey the most. That’s probably because credit cards notoriously have high interest rates — the average interest rate on a credit card right now is 24.24%, according to LendingTree.

When rates are that high, if you’re only making minimum payments, you’re not making any progress on eliminating your debt.

With that in mind, lay out your debts in front of you, and prioritize those that will cost you the most the longer it takes you to pay them off. Seek the help of a qualified financial planner if you need to, as they can provide you with the support you need.

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Cut back on spending — dramatically

At 29 and 32, this young couple was far outliving their means. One of the best ways to get on track financially (and stay there) is to use a budget.

And yet a recent survey from credit.com reveals 27% of Americans don’t feel they need a budget, while an alarming 12% are afraid to even check their bank accounts.

But if you aren’t paying attention, it can be easy for spending to get out of hand — something Ramsey suspected the couple in question may be guilty of.

“You’ve been living at about 10x where you’re going to get to live for the next three years,” he said.

And maybe you just need someone — a friend or family member — to hold you accountable. The National Bureau of Economic Research ran a study that showed individuals were more likely to save money if they were given explicit instructions to do so.

Downsize your ride — and all the expenses that go with it

Cars are incredibly expensive — and they’ve only gotten more so as prices continue to rise. The number of consumers on the hook for at least $1,000 a month for their car payment rose to a record high of 16% in Q4 2022, according to data from Edmunds.com.

If you have more than one vehicle in your household, you might want to consider getting rid of your secondary car. Or maybe trading in your current car for a less expensive older model.

Driving less isn’t an option for some, though. With that in mind, look into your options for trimming your gas budget too.

And while you’re at it, you might as well review your auto insurance policy. Are you overpaying for coverage you don’t need? Call up your insurer and trim it back.

Even if you’re getting the exact coverage you need for your driving habits, there might be another way to save on insurance. If you haven’t shopped around for a better rate lately, you might still be overpaying. While insurers mostly use the same information to come up with a rate for you, they each use their own algorithm — which means you may be able to snag a better rate elsewhere just by shopping around.

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Negotiate your rates

Did you know you can call your credit card issuer and simply ask for a lower interest rate?

You might be able to shave off a few percentage points by letting your issuer know you’re trying to pay off your debts. While people who have better credit scores and have proven to be reliable borrowers are more likely to get a reduction, there’s no harm in asking if your credit score has taken a hit.

If the issuer won’t permanently reduce your rate, you might still be able to get a temporary rate reduction. Your card provider might also offer assistance programs that can help you get on track to pay off your debt.

You might also want to trade in an incentive points credit card for one that offers lower interest rates. Rewards cards often feature slightly higher interest rates, and every percentage you save counts.

Consolidate your debt

You’ve already sorted through all your different types of debt. If you’re having trouble keeping up the due dates for multiple accounts from various lenders or dealing with sky-high interest on multiple credit cards, you might consider consolidating your debt.

Having a single loan to pay off makes it easier to manage your payment, and you can often get a better interest rate than what you might be paying on things like credit cards and car loans.

Or if, like the caller on Ramsey’s show, you own your home, your home equity might be a good resource. If you’re able to get a favorable rate, you could save yourself a boatload of interest.

Unfortunately for the caller, she was far from equity rich. And so when he heard they were living with her parents and renting out the condo in question, Ramsey immediately advised her to sell — which is another option if you’re really underwater.


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

James Battiston Content Specialist

James Battiston has been writing personal finance articles for various websites for the past four years. He has a background in film and TV production, and can often be found consuming far too much coffee.


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