Finding Financial Redemption: Debt Confessional

Jan. 15, 2009 — -- Dave Ramsey, the high-octane money-management guru, radio host and author of "Financial Peace," tours the country counseling Americans on something he knows all too well: debt.

He had some harsh words for a group of consumers representing a cross section of American workers -- teachers, hairstylists, auto workers among them -- all hurting in the tough economy and all with one thing in common: debt.

"This is the freaking problem here and nobody talks about it, do they?" Ramsey told the group. "Let me ask you something then. We have 16 families here. Incomes from $15K to $150K, what would you guess the total debt is?"

After a couple of shy guesses around $150,000, Ramsey wrote the answer on a board -- $637,843.

"It's a mess. You are going to have to get up in your mirror and go, 'You're the problem,'" Ramsey said. "That's the bad news. The good news is you're the solution."

Project manager Donna Kumar told Ramsey that debt put a strain on her marriage, which is now ending in divorce.

"I am really afraid right now. … It's filed. It's going to be finalized soon," she said. "The biggest reason for that is me. And that's the first time right now that I have ever said that. It's me and debt and my inability to get control over it. I am going to be alone and paying bills on my own, and I am terrified."

Katie Huff and her husband make less than $50,000 a year but owe more than $30,000.

"I am bringing my husband into it, giving us more debt. It's just hard," Huff said through tears.

According to Ramsey, the beginning of a debt-free lifestyle starts with communication and coming clean with your significant other.

"Say, 'That's it. I've had it. I'm done with this. I'm not living this way.' When you get to that moment is when you change your life," Ramsey said.

Ramsey said budgeting is also essential to controlling debt.

"It's the dreaded B word. We think of it as medieval torture. But think about it. If you work for a company called You Inc., and your job was to manage money for You Inc. and you manage money for You Inc. the same way you manage money for you now, would you fire you?" he said. "Most people go, 'Uh, yes.'"