$200k Income, $8k Debt: Ramsey’s Advice? “Cut Up Your Cards and Get Serious.”

Dave Ramsey put it pretty bluntly when a caller with a $200,000 combined income rang in asking what their next move is with their $8,000 debt and lack of emergency savings.

He said to “cut up” those credit cards and pay off that credit card debt already. Indeed, Ramsey is right on the money as he usually is regarding those who have outstanding balances accumulating high double-digit interest on various credit cards.

And while cutting up the cards seems a tad extreme, I do think it’s not the wrong call, given the couple has demonstrated they’re not using their card responsibly.

High income doesn’t mean freedom from financial stress. Just ask this couple who’s seemingly lost direction.

For someone with a respectable, even hefty income, there’s really no excuse to have thousands in credit card debt just sitting there.

Also, the caller recently received a fat commission check of $12,000 that could instantly obliterate that credit card debt! Indeed, Dave Ramsey told them to pay the debt with the check and to get a plan. This goes without saying!

In any case, it wasn’t the financial situation itself (think cash inflows and outflows) that was the biggest problem. Rather, it was the lack of a plan. And it’s their lack of expense tracking that’s costing them money when it really didn’t have to be that way.

Ramsey clarified this without any sort of sugar-coating. Indeed, sometimes a good dose of the cold, hard truth is needed to get people to change their ways and treat a sticky financial situation as a learning opportunity!

Sure, talking about finances, debt, and all the sort with one’s spouse may not be the most comfortable conversation in the world. But to keep a sum of debt on a credit card when it could have easily been wiped out at an instant seems like poor financial hygiene.

A few simple changes can fix this situation. But learning how to budget is key to avoiding it from happening again.

Fortunately, that can be corrected with a bit of help from a financial advisor. In the meantime, paying off the debt with the commission check, as Ramsey recommended, and “cutting up” the cards or, at the very least, putting them away in favor of debit cards or cash seems like a wise idea until they can promise themselves they will pay off the full credit card bill at by the end of every month.

Dave Ramsey does not like debt, especially credit card debt. And it’s not hard to see why, with the many Americans who may be unaware of the true costs of keeping balances unpaid for extended periods of time.

I’m in the same boat as Ramsey. Credit card debt is one of the worst debts to be in once the interest starts piling up.

Leaving debts sitting on a credit card when one has more than enough cash to put the amount off seems like such a waste. Sure, it’s a nice thought to think about what one can spend a commission or bonus check on. But with a debt balance, doing the financially responsible thing will be the right call every time.

In short, this was a very simple case that Ramsey instantly knew how to address. Eliminate the debt, build some form of rainy day savings, learn how to budget, get rid of the credit cards, and, perhaps most important, start communicating and planning instead of worrying!

The bottom line

As it turned out, there was no need to stress or lose sleep over the credit card debt if there had been a plan to tackle it. For a couple with such a high six-figure income and a rich commission windfall, it’s pretty concerning that the couple didn’t know what to do with their $8,000 in credit card debt.

Indeed, high incomes do not necessarily translate into financial well-being, as evidenced by the case of this caller. Hopefully, the Ramsey caller listens up and changes his ways. For those in a similar situation, paying off the card and putting it away should be the top priority.

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