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A man from Allentown, Pennsylvania, found himself drowning in payday loan debt after losing his job, and he called “The Ramsey Show” hoping for a way out. The result: a harsh wake-up call from personal finance experts Dave Ramsey And Jade Warshaw.
The caller, Alex, explained that he owed about $3,500 in payday loans, all with interest rates around 500%. He said he withdrew them after he was laid off in August because he didn’t have good enough credit to get a traditional loan.
“All my money just goes toward these payday loans and my basic living expenses,” Alex said. He makes about $800 a week driving for Lyft and do side gigsbut this was not enough to break the cycle.
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Ramsey responded with tough love: “Don’t ever walk in those places again and borrow money for the rest of your fucking life.” »
Alex said he would start a new job in three weeks that would pay him about $70,000 a year, but he had to survive until then. The hosts urged him to immediately find additional weekend work, even suggesting jobs like hanging Christmas lights, working in the yard, or taking shifts at FedEx or UPS.
“If you drive a car 10 hours a day, you don’t make any money,” Ramsey said. “Work Saturday and Sunday.”
Ramsey also advised Alex to prioritize his spending. “The first thing you do is buy food. The second thing you buy is buy electricity,” he said. “The third thing you buy is rent. The fourth thing you do is make a car payment. Only after all your living expenses are covered do you pay anything on a payday loan.”
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Alex floated the idea of revoking payday lenders’ access to his bank account until he could pay, and Ramsey agreed: “That’s great. Stop it, change your bank account, or close your bank account.”
But Ramsey reminded him that even if he temporarily cuts off access, he still has to repay the debt: “You’re going to have to pay them the $3,500 and you’re going to have to pay them a bunch of stupid interest at some point.” »
The emotional tone intensified as Ramsey lambasted the payday lending industry: “Teach your kids, teach your grandkids, teach everyone’s kids to stay away from these bastards. They screw people over.”
