A 61-year-old Arkansas woman called into the “The Ramsey Show” hoping for clarity on investing in her 401(k) while still paying off debt. But what started as a simple inquiry quickly turned into a reality check, tractor and all.
The caller introduced herself as Teresa, a self-described “country girl” with no nest egg. “I have no retirement money saved up whatsoever,” she told personal finance expert Dave Ramsey, although she had started following his Baby Steps plan and scraped together a $1,000 emergency fund.
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With six years left before collecting Social Security, Teresa wondered whether contributing to her employer’s 4% 401(k) match made sense, despite still being deep in debt.
She told Ramsey that she earns about $67,000 a year but owes roughly $69,000, which includes $11,000 in student loans she’s been chipping away at since 1999, $18,000 on a car, $12,000 in a personal loan, and $26,000 for a tractor.
That last one stopped Ramsey cold. “Why do you have a tractor?” he asked.
“We’re country folks,” Teresa answered. Her husband, who’s 75 and on Social Security, is in poor health and doesn’t work. She admitted the tractor was more for clearing hunting plots on their seven acres — land that, as it turns out, is worth just $500 an acre.
“Your $26,000 tractor for a $4,000 piece of land,” Ramsey replied. “Broke people don’t have $26,000 tractors.”
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Though Teresa defended the purchase as something she bought before discovering Ramsey’s methods, he didn’t let it slide. He told her to sell it, even if she had to borrow a few thousand to cover the difference. Sell the car, too. In his words, “You guys are in emergency mode, girl.”
Ramsey took it even further, joking that Teresa needed to sell “everything in sight,” and that even the local deer ought to be nervous. His message was clear: This wasn’t the time for sentiment, toys, or lifestyle luxuries. It was time to hustle.
Then he laid out the bigger picture. If Teresa attacked her debt aggressively, cut the excess, and freed up cash, there was still time to build a solid retirement. “You’re trading a $26,000 tractor for $150,000 bucks in your retirement,” Ramsey said. “You’re trading an $18,000 car for another $100,000.”
