The way you talk about money speaks volumes about your financial situation and how you feel about any setbacks. Dave Ramsey picked that up when a caller with a $200,000 annual household income was stressing out about $8,200 in debt.

The caller and his wife have $5,000 left in credit card debt and have been paying $1,000 per month toward that debt. They have no other debt and even paid off two cars. However, they incurred a $3,200 medical bill due to the recent birth of their second child.

Ramsey said that this should be a joyous time for the couple, but the way the caller talked about money suggested otherwise. The caller referred to the $3,200 medical bill as “debt piling up,” but Ramsey approached the conversation from a different lens. Ramsey’s stance offers valuable lessons for people who want to improve their money management skills.

Paying Off Debt Right Away

The caller reached out to Ramsey to see if it made sense to pay off their debt right away. For context, the caller had a good quarter and received a $12,000 commission. However, the caller is nervous about not having any cash on hand. The couple does not have an emergency fund, and he also wants to keep some money available for the stock market.

Ramsey told the caller to pay off his debt with the commission. He asked the caller why they would mess around with a small amount of money. He said the $3,200 medical bills would be a bigger deal if they were only bringing in $30,000 per year. However, Ramsey anticipates that the couple easily brings in more than $10,000 per month after paying taxes.

“See what it’s doing to you,” Ramsey said when referring to the $8,200 debt between the credit card and medical bills. “Even your language says that this is stressing you out.”

Track Your Money

Ramsey encouraged the couple to create a written game plan that included their budget and spending plan. Making an effort to track money can feel like getting a raise since you tighten the reins. Spending less money allows you to build your emergency fund faster and make more investments.

“Tell your money what to do instead of wondering where it went,” Ramsey said during the call.

You have plenty of options to track your money. Ramsey advocates for a written plan, and you can use resources like Excel or Numbers to track your monthly income and expenses. There are also a bunch of budgeting apps that offer fancy dashboards and make it easier to perform calculations.

The Weight Of Debt

This call demonstrated how much debt can weigh on a person, even if they are making enough money to cover the debt. Not everyone can handle leverage and similar good debt, but most people who are in debt end up in bad debt. For instance, credit cards and high-APR personal loans are bad types of debt.

Making short-term sacrifices can free you from your debt burden sooner. The couple in this scenario can get out of debt quickly. However, some people may have to make bigger sacrifices with how much they cut spending. You may also need to get a side hustle, depending on the size of the debt.

Although the weight of debt can feel heavy, it will feel incredibly rewarding once you get out of debt.

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