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Credit Card Debt Calculator”

BOO! Your financial horror stories

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As a dude in my 20s, Halloween is my favorite holiday for obvious reasons.

Your favorite blogger and New York Times best-selling author, Ramit Sethi

A few days ago, in preparation for this magnificent day, I asked the people on my Insider’s List to send me their financial horror stories.

Here are some of the best:

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“How do I re-build credit when I can’t get a credit card?”

Hi Ramit,

Loving the savings and credit updates; I can’t believe you give out this advice for free!

Here’s my financial horror story:

In an attempt to assert independence and get out of an unfortunate living situation my freshman year of college, I moved out of my parents’ house into an apartment I couldn’t really afford.  I planned on paying my rent with my ‘leftover cash’ from financial aid.  A few months later I felt the crunch and borrowed from family members to make payments and racked up over $5,000 in credit card debt to pay for food and entertainment.  I was drowning and it was all because I wanted frozen pizzas, ice cream, ramen, and independence.  So, so stupid.

I entered credit counseling and five years later am credit card debt free.  I got your book and started reading on how to save.  Automated saving is so simple and so effective.  My car got totaled this past Friday and I actually have the money to deal with it – a far cry from my college days of financial irresponsibility (read: days of denial). I even started a retirement account through my employer.  Not too shabby, eh?

So here’s my question: Since I went into credit counseling I’m having a hard time getting accepted for a credit card, but I need to rebuild that credit.  I’ve been reading your tips about limit increases, suggested best credits cards (LOVE IT when you share your favorite things!), but I have to get back in the credit game first.  I’ve called my old cards and tried to shmooze them into reopening my old accounts but that didn’t work either (I even kept a spreadsheet tracking those convos, per your command)  So how can I get back in the credit game with my irresponsible college past hanging over me?



My answer:
Nice job, Jackie, and congrats on changing your life around.

To rebuild credit, get a “secured credit card.” Go into your bank and ask about them. You’ll have to put down some money to “secure” the card, but after a few months of paying it off regularly, you’ll graduate to being able to get a regular credit card.

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“I have $180,000 in medical bills…”

Financial horror story: I’m in my late twenties and just got pointed to you. I am divorced and have custody of my 3 kids. My ex does not work and will not get a job, so I get no child support. I bring in roughly $3200/mo, but half of that goes to daycare. Keep in mind I still buy diapers and wipes, food, clothes, etc.

I live in Texas where land values, and thusly the cost of living, are lower, which is how I survive, but I still have to live with family… Texas does not have alimony by the way…

I’m so broke I can’t even afford your book, so I’m having a family member buy it for me for Christmas.

The horror part is that I got in a wreck a year and a half ago which shattered two vertebrae, and I didn’t have medical insurance because the company I contracted through at the time didn’t offer it, so I have $180,000 in medical bills sitting on my credit report.

Now I have a better (not contract) job and medical insurance, but still no money.

I like your advice about cutting down eating and entertainment expenses, so I’m going to figure out what I spend each month on those and try to cut that down as you suggest.

Hope this is enough of a horror story for you.

Please keep my name anonymous. Thank you.

My response:
Sorry to hear about your situation. Two things:

  1. Keep an eye out for an email from my staff. I’m sending you a signed copy of my book.
  2. One thing you should know is that medical bills are HIGHLY negotiable — often for pennies on the dollar. Research it (just Google it) and spend a few days reading articles, posts, and forums. Considering the hospital has no chance of recovering $180K from you, they likely will settle for tens of thousands of dollars off the “retail” price. Good luck.

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“The people you make fun of are out there…”

Someone I work with– who is building a brand new house–said her husband wants them to bring their own coffee to work in the mornings from now on to save money for house payments.

The people you make fun of are out here…


My answer:
Jesus Christ

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You want a financial horror story. You got it!

You want a financial horror story. You got it!

I dont blame anybody for this just me and only ME.

I was in an MLM; ok, i will give the name what the heck, Amway, for about 7-8 yrs. My choice, I dont blame anybody not even my family.

I have seen success stories with my own eyes. But it is NOT for every one. Well, in my opinion, 98% fail because they dont do a squat with it, dreaming to become rich one day.

I did work on it but may be not 100% or close to what it requires to succeed. Anyways…

Coming to my story, long story short, i spent close to $1000 – $1200 per month average on products/conferences/meetings/

TIME the whole ball of wax. Over 7yrs it amounted to 70k approx.

Should i say more 🙂 you got the picture.  I QUIT!!!


My answer:
2 things:

  1. If you ever get in an MLM again, I will personally find you and kill you myself. Everyone else considering MLM (then again, if you are, you probably cannot read these words because you are illiterate), see my previous article: I Hate Indian Network Marketers So Much
  2. Btw, MLM does not fail because people “dont do a squat with it” — it fails because it is systematically built to extract value from people at the bottom of the pyramid, while those at the top revel in the profits from the constant inflow of clueless newbies.

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“I started living off my credit card…”

After graduating college in May of 2009 I had no credit card debt (with the exception of my graduation invitations and party supplies), problem was I had no job either.

I used my money from graduation to live for a while, but then more and more items were getting put on credit cards. I would put the items on the credit card thinking I will have a job soon and be able to pay it off at that point. I had about $1000 in credit card debt on my card by the end of July 2009. I did have a position with Americorps at this point though. I made enough that I would always pay more than the minimum payments. I knew at the end of the program I would have a good paying job and be able to pay off all my debt in one month so I continued spending. In February of 2010 I had about $3000 in credit card debt.

I left the program before it finished and did not get the good paying job because I did not finish the program. I started living off my credit card at this point and raised my credit card debt to about $6000. To get out of debt I bought $2500 worth of Mary Kay inventory to sell. Moral of story before I got a job I had racked up about $8500 in credit card debt in a year and two months.

In response to your blog post about raising credit score I was also wondering if it is always a good idea to request credit limit increases. My husband and I are looking at buying a house right now, the lenders requested credit scores, and so my score went down. Should I have the additional inquiries on my record for the two cards I have?


My answer:
Sometimes I find it helpful to try to analyze someone’s decision-making instead of individual decisions. For example, why did you not finish Americorps? I’m sure you have a very specific answer (“I hated my boss, I was sick, etc”) but ask yourself: Have you not followed through on anything else? Are there patterns?

One pattern might be jumping from one salvation to another (Americorps…Mary Kay…). Another pattern might be not doing your homework, which is why I was one knife slit away from killing myself when I read that you’re planning to BUY A HOUSE. Why?

Have you truly run the numbers? Have you added 40%-50% (not a typo) to your monthly payment to account for taxes, maintenance, new furniture purchases, fees, and more? Have you read my extensive articles on buying a house?

Do you understand that buying a house requires a ton of money down, and you will likely go from being in debt to being in a different kind of debt?

Again, I’m not categorically against buying a house. I will, at some point in the future. But from your question, I want to make sure you’re not jumping from one catastrophe to another potential catastrophe. Do some homework before making the biggest purchase of your life, please.

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Now I’m wondering…if you know someone who’s had their own financial horror story, what did you do? Did you try to give them advice? How did they take it? Leave a comment so we can all hear from you.


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  1. A story related to the girl with the medical bills, and another option on how to deal with it:

    Three months after I turned 18, while I was still a high school student, I broke my femur while I was snowboarding in Canada. With hospitals, ambulances, and an airplane ride back to the US, all in all it was an accident that cost about $80,000.

    I was also poor. My single mother made about $1 above minimum wage, and I’d saved money from job at McDonald’s in order to afford the trip.

    The airplane was operated by a non-profit, and their charge for the lift was about $20,000. They had no desire to bankrupt a poor kid, and so they forgave the debt entirely.

    The hospitals in Canada and the US wouldn’t forgive the debt outright, but their response was effectively the same. They tried to collect for a short period of time, but then wrote it off, and they didn’t even try to sell it to a collection agency.

    The one account that did get sold to a collections agency was the ambulance ride in the US, the one that drove me from Boeing Field to Harborview Medical Center. The debt was all of six hundred bucks, but that seemed like an impossible amount of money to me at the time.

    I let it sit. After I graduated from college I landed a good job and was eager to get rid of it. I tried to negotiate with the collections agency a few times, stating that I would only agree to pay it if they’d agree to clear it from my credit report, but the agency was rude and obstinate. It was scheduled to fall off of my credit report in two years, so I never paid it. It fell off, and now two years later my credit score is in the upper half of the 700s.

    * * *

    Ramit’s advice on negotiating is definitely the right first step.

    However, if that fails, I think you need to do what is best for you and your family.

    You probably worry, like I did, that you have a moral obligation to repay this debt. However, you didn’t run up a credit card with luxuries, you were given life-saving medical treatment while you were knocking at death’s door. Even if you were conscious and accepted the treatment, you did so under duress. Stiffing the medical system in this situation is little different than canceling an unconscionable check you wrote to Crassus while your house was burning.

    Bad marks on your credit report aren’t forever, they last only seven years. What’s more, your credit report during this time period does not matter.  If you choose to repay the debt, you’re going to be in no position to do anything that requires a credit check.

    Choose well.

  2. I have no business giving anyone financial advice – outside of spend less than you earn & pay attention to interest rates. What I tell them is to get your book & sign up for your free emails. It’s a bit embarrassing as a 50-year- old youngster to ask for financial advice/teachings from someone almost 1/2 my age… but I gave up my ego a long time ago. Whatever works & your material helped get me out of credit card debt after I was in a car wreck years ago & missed payments on credit cards and my interest rates more than doubled. At least I got the credit card debt turned around.

  3. lol at the picture. Anybody who takes advice from that person definitely has a horror story. To answer your question though, I have given financial advice to people only to get the typical, “I know. I need to do that.” only to find out later they never did anything except buy the new ipad. Guess you are right about all that psychological stuff. In the end, people will do what they want to do until they are fed up enough to want to make a change for themselves.

  4. I sympathize with the MLM person. I got sucked into Amway when I was 19. One of my Navy instructors “showed the plan” in the classroom. I wish I could go back in time and complain. That was against the law. (Not being in Amway, but promoting a side business with Navy time and resources and on duty). So for the next several years, I gave up Saturdays going to Rally, gave up weekends for larger functions, cold contacting, etc. That’s valuable drinking time I’ll never get back. I blew a ton of money and time on it over 5 years or so.

    Years later, I learned that the higher-ups in most MLMs make very little money from the actual products. They make most of their money through tapes, books, and function ticket sales. That’s why the emphasize getting on the “tape of the week” program rather than hitting your 200 PV.

  5. Dad’s and my financial horror story: He started a business when I was two. Somehow he was able to buy a house when I was about 6 years old. Then when I was 13, he “handed over” the financial responsibility to my mom (and seriously when I heard this many years later, I’m thinking WHY??). All of a sudden, I was put on the lunch card program in high school. I still had no idea what was going on except that there were a lot more yelling in the house. Then during my junior or senior year of high school (I forgot which), the high school counselor helping me with my FAFSA told me that she doesn’t understand how we even live. I was confused and didn’t know what she meant by that.

    Fast forward four years later, I made the stupid decision to move back home. My dad tried to convince me work at the family company until I find a job of my own. That’s when I learned that his personal (credit cards) and business debt (debt to vendors) amounted to half a million. There was even a second loan taken out on the house. And everything was all mixed up together (he took out personal credit card loans to put money into the business), and I didn’t know where to start correcting things for him (because he was my dad and he asked me to help him). I tried for a year to put him back on track. I found a few personal finance blogs (this site is one of them) and started reading. Then I went to the library and read some more. Then I practically threw everything I learned/knew at it. I started to see some progress (debt started going down), and I explained what I did to my dad (and seriously thought he’d take it to heart and learn from it. He didn’t, and you’ll see that later). I foresaw a need for emergency money and tried to get him to save money at the same time as well as to separate his personal and business accounts. The progress I saw wasn’t fast enough for my dad. He wasn’t willing to put away money into a savings account because he felt a moral obligation to pay everyone (credit card companies and his vendors), so every dollar he had coming in, he wants to use it to pay down his debt. And so the money-borrowing continued…

    At one point, their business accountant tried to get me into a MLM, and my parents kept trying to force me into it because they were buying into the crazy idea. I eventually gave in a little, and I bought a book from the accountant. Then as I was “studying the material,” I grew more and more skeptical about it, especially when the accountant kept asking for my friends’ numbers and emails. I didn’t want to get my friends involved. A week or two into it, I demanded my money back and returned the item. The accountant’s family and I are no longer on speaking terms ever since I accused them of trying to scam me. Since then, I’ve googled every company I apply for to see if they’re part of any scams (“[name of company] and scam”), and I’m lucky that I did because I nearly fell into another one couple years later.

    On the mom end, she felt like I was stealing her job at the company. And because my dad took back some of the financial responsibilities, she felt like her spending ability was being frozen. She started opening up lines of credit under MY name because she knew my SSN and all other vital information. I ended up paying a shit ton of money because I didn’t want to press charges. Capital One didn’t believe it to be fraud because I lived with her and because she’s my mother. Since then, I’ve checked my credit report every month for a year or so until I was sure it wouldn’t happen again. I now check it quarterly. And on top of all that craziness, there was physical and emotional abuse. I ended up calling the police so many times for domestic violence, and at one point, I was crying so much that the police officers didn’t understand me and placed a 5150 hold on ME (as opposed to the parent who threatened to kill the other and then fight with the police officers so that they’d shoot that parent too and they’d both die). Then a month later, I was hit with an emergency hospital bill for $5556 for that hold. Luckily I was able to write a letter to the hospital to get it waived on the account of the officers being rude and not giving me a choice (“Are you going to accept help or not?” What was I supposed to say to that? It sounded like they’d have place that hold on me either way).

    Though overwhelmed with guilt about leaving my parents (and lacking filial piety), I completely up and left home. I had to; I was spiraling down into depression and I felt like I wanted to kill myself. I went to a city where I knew no one with only $2-3K in my bank account (my only debt were student loans). I found a job within 2 months, and three years later, I paid off my student loans and ended up with around $20K in my bank account. My parents? My dad eventually handed over the financial responsibilities to my mom again (“to make her stop complaining”). They’re now separated, bankrupt, unemployed, and without any money in their savings. The house is pending foreclosure. And they still blame me for not staying because “had I stayed, I could have prevented all that from happening.” Yeah, right.

    Moral of the story: If someone tries to get you to fix their financial problems, don’t do it. I was so traumatized that when my (ex-)girlfriend told me she wanted me to take care of her finances in the future, I broke up with her (ok, yes, she was crazy in other areas too).


      Good call on the crazy g/f. Nice job recovering from a very traumatic period in your life, and good luck!!

  6. Ramit-

    Upon extended observation, I have come to the conclusion that there must be some addiction for people to operate at $0 in the bank account. It seems worse than a mere fear of debt, and has advanced to the “I must not have more than $100 in my account at any given time.” For some, “saving” is maybe $1000 that gets blown on junk that depreciates immediately upon ownership, even for the one who “saved” to get it. How often do you work with people who are addicted to operating around zero? How about those that are deeper than zero? In your experience, what is “rock bottom” for a spending addict before they realize they need help?

  7. I am the Jess with the all the credit card debt.

    All of that credit card debt is gone, I have money in a Roth and an emergency fund at this point. We will be able to put at least 5% down on our house and with a 15 year mortgage have enough income outside of putting towards those items to pay up to 1.5 times the mortgage and insurance.

    Yes I have read your articles as well as many others, including articles from

    You asked for the horror story, not the happy ending. Here is the happy ending. My then fiancee and I took the Dave Ramsey course along with reading your book, so I owe alot of my happy ending to your book. I have turned my financial life around, and am on the right track now. On the professional front, I am in a job that I love, and will not be leaving any time soon.

  8. Not to turn this into an MLM thread, but I currently participate in one that does home parties (like Tupperware, but with a bit more buzz!) and can definitely see both the danger and the benefits in them. As a Ramit subscriber, I did tons of research before joining and found one that does not require inventory or recruiting and gives straight 50% commission on all sales. I do pay $30/mo membership fees, but I believe the benefits (CC processing, order/shipping handling, etc) the company provides are worth it.

    Where I got into trouble with it was the novelty factor. “Oh look! New business! Buy marketing materials and promo items and ads and STUFF!” I launched headfirst into a business before I knew if I could make it work or what, exactly, it would take to make it work. I spent $250 on giveaway prizes from a closeout place that I STILL can’t figure out how to get rid of because it’d make more sense to give away products my company actually sells than random other things… Definitely a learning experience. I’ve now cut back and am making smarter decisions about what and how to invest in this side business. As long as I’m selling at least $60/mo to cover the membership fee, I’m not losing anything, and I’m gaining the marketing, business finance management, and most importantly self confidence to help both in my full time career and future entrepreneurial efforts. In my case, I’ve taken it as an opportunity to learn about things like Google AdSense and Analytics, website design, and promotional strategies.

    I also have yet to recruit anyone. I don’t push very hard at it (though it would be a source of minimal-effort income for me, as in all MLMs) and have actually advised a number of folks AGAINST it because I thought they couldn’t afford for it to fail or that they’d fall into the ‘this is supposed to be easy money, why isn’t it working?’ trap.

    So, it’s not for everyone, but as long as you go in with a clear head and know what to and not to expect, it can be a fun way to earn some extra money on the side. (with the right company!!!)

  9. Almost horror story:
    my husband and I decided that we wanted a puppy. so naturally, we googled “puppies, san diego california”. we found a website where breaders can post their puppes- a golden retriever puppy ranged anywhere from $200 to $2,000, so we looked around the middle to avoid a scam. We emailed the seller.
    A few minutes later, we got a reply from a guy named John- who supposedly lived in san diego, but the puppes were actually in North Dakota because they were his mothers pups, and she recently died (sob). He was not a pet breader himself, and just wanted to get rid of themto loving homes, so if we paid the shipping then we would get the puppy. This sounded incredibly unlegit- but we proceeded emailing just to see if it was just a sketchy good deal.
    Fast FWD two days later: John tells us that he was going to ship today- just wait for the email from the pet courier. The email came- it was a print screen of a Western Union page where we could input our credit information.
    I copy/pasted his email address in to google and not only was John reported on numerous consumer reporting website- but he also had more than 5 other postings of other puppies.

    We almost got puppy scammed. My husband and I- who both work in security- thankfully spotted it pretty early on- but I cant help but think of the little old lady who paid out her small retirement check who figures out a week later that the puppy isnt coming.

    To combat this atrocity, I reported to the FBI website as well as enlisted the help of some hacker friends.

  10. I’ve had multiple friends in serious credit card debt for various reasons ranging from graduate school debt, extremely terrible finance management, or complete lack of desire to search for a well paying job.

    I suggested to several of them that they call the credit card company and set up a payment plan that included a significantly lower APR.

    NONE of them followed up. Only one of them is seemingly in less debt (because she got a higher paying job). I don’t understand why!

    Side note – I also read your MLM article. I met a woman in an autobody shop when my car decided not to start after I stopped for lunch. Rough day, I was tired, and this nice lady offered me a free facial. Sure. Why not? So I dragged a coworker with me to the MARY KAY meeting – thinking it’d just be the 3 of us. Nope! It was a monthly meeting with all the consultants and all the poor girls they had sucked in. We “did our own” facials (wtf?) to try their products. They gave us tickets for asking questions. Then they raffled off products with those tickets (I got free eyeliner). All of us poor, unsuspecting ladies had to stand in front of the room to show off our new makeup. Then, the best part, when I really wanted to run screaming out of the room, they started “pinning” the new consultants in some crazy sorority-like ceremony.

    It’s a scary pink cult. The only plus to that MLM is you get to buy your own products at 50% off (market value).

    • They don’t take the advice because to do so would:

      a. Involve effort in actually doing something, complaining is easier
      b. Force them to admit they’ve made dumb decisions in the past
      c. Force them to admit they can’t live the kind of life they want with the income they are currently generating and they will have to *gasp* change one or the other, which involves a. above. Circle complete.