‘Where the flip are you people spending money?’: Dave Ramsey couldn’t believe this LA couple who earn $300,000/year — but still drown in $119,000 of debt. Here’s where their income goes

That’s because the Los Angeles-based couple both work as engineers and earn a combined annual income of $300,000, much higher than the median household income for the city, which is $87,760.

Surprisingly, their monthly mortgage payments are just $5,000, which means the house isn’t the root cause of their financial trouble.

“It takes $60,000 a year to pay your house payment, so if you were to live on $200,000, you would be debt-free in a little over a year,” Ramsey told her on a recent episode of “The Ramsey Show.” “Kind of sounds absurd when I say it that way, doesn't it? Where the flip are you people spending money?”

Digging into the details, he discovered how easy it is for high-income households to slip into bad spending habits and unnecessary debt.

Reckless spending habits

Since the monthly mortgage payments are not outrageous, Ramsey suspected Amber and her husband have a reckless spending problem that’s preventing them from paying off their debt. “Your lifestyle is eating you alive somewhere,” he said.

Amber said they had several unexpected expenses recently, like needing a new AC, furnace and fence, and she also admitted they like to take vacations since their work is taxing. Her husband even had to sell one of his cars to pay off a contractor to fix a leak they had.

But Ramsey wasn’t convinced. “A furnace doesn’t throw this thing off as far as it’s off. We’re off $100,000 a year.”

Their situation highlights how many high-income households succumb to lifestyle creep. About 36% of Americans who earn more than $200,000 annually report living paycheck to paycheck, according to a 2024 study conducted by PYMNTS.

Despite their high income, many individuals in this bracket seem to struggle to build savings or get ahead financially.

Among these high earners, 17% cited poor financial habits as the main reason they do not save.