$1.3M in Debt at 28: Woman Calls Dave Ramsey After Mortgage and Businesses Push Young Couple to Brink

A woman dialled into the Dave Ramsey Show seeking urgent help for $1.3 million (£965,237) in debt she has accumulated with her husband from their businesses, a mortgage, a car loan, credit cards, and back taxes.

With her voice cracking from stress and worry, she explained that both are 28 years old and married for six years. Ramsey said the couple is in a frightening situation, and he quickly began to break down the numbers carefully. They had $48,000 (£35,639) remaining on their mortgage on a home worth $250,000 (£185,622). Their car loan had an outstanding balance of $17,000 (£12,622), and they owed $30,000 (£22,274) in taxes.

Funding a Summer Camp Venture with Credit Cards and Personal Loans

The remaining $1.2 million (£890,988) was business loans. Ramsey was taken aback, but the woman explained that her husband lost his job four years ago. He had been doing odd jobs and struggled to find stable full-time employment. As their financial situation worsened, they decided to start a summer camp in 2022, funding it with credit cards and personal loans. This camp accumulated about $15,000 (£11,137) in credit card debt alone.

To stabilise their finances, the couple then decided to purchase assets of another business for $1.2 million. These assets included rentals such as staging, lighting, audiovisual equipment, and inflatables for the camp, which they believed would generate steady income.

Ramsey expressed shock that a couple with no stable jobs and an unproven summer camp could secure such a large loan. When asked who provided the loan, the woman revealed it was the Small Business Administration (SBA). She added that the summer camp does very well, generating approximately $200,000 (£148,498) annually.

However, selling the assets they bought is no longer an option, as the couple later discovered they overpaid by over $400,000 (£296,996). The assets are now worth far less than the debt they owe, leaving them in a tough financial position.

Ramsey Draws Parallels with His Early-Life Bankruptcy and Personal Struggles

The woman stated that their minimum monthly payments on the business debt total $50,000 (£37,124), but they do not even earn that much each month, given that their ventures are seasonal and unpredictable.

Ramsey shared that when he was 28 and married, he went broke and lost everything, ultimately declaring bankruptcy. From his personal experience, he told the couple that the worst-case scenario is losing the business, the camp, and starting afresh after bankruptcy, with hope for a new beginning.

'You hold onto each other. You hold onto your marriage. So what? Lots of people are going broke,' he said reassuringly.

While Ramsey usually has a clear strategy for callers with diverse money problems, in this case, he admitted he doesn't see a way out for the couple without significant sacrifices.

One suggestion Ramsey offered was that they should sell the businesses for whatever they can get, even if it's $800,000 (£593,992). He advised them to approach the SBA for a short sale, hiring an attorney and telling the SBA, 'you are getting nothing if you don't take the $800,000 because I am walking.'

If a short sale isn't possible, Ramsey suggested the couple could sign a note for the difference and 'scrape through' the remaining $400,000, tackling their other debts step by step. He emphasised that they should pay the IRS first, as they are not bankruptable and can enforce collection.