The Ramsey Show - App - A Dream Without a Plan Is Called a Wish (Hour 1)

Episode Date: February 27, 2020

Chris Hogan, Rachel Cruze, Home Buying, Debt, Insurance Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studio, this is the Dave Ramsey Show, where America hangs out to have a conversation about your life and your money. I'm Chris Hogan, filling in for Dave this hour, and I'm joined in studio by best-selling author and financial expert, Rachel Cruz. Hello, Chris Hogan. How are you? I'm doing great. Doing great. Excited to be here with you this hour. Hello, Chris Hogan. How are you? I'm doing great. Doing great.

Excited to be here with you this hour. I am excited as well. And we're going to take your calls. We're going to dive in to the things that are on your mind. So in order for us to do that, you need to give us a call. The number to call is 888-825-5225. Again, that's 888-825-5225. We're here for you.

And you can find us on social media, at Ramsey's Show. Also, you can find Rachel at Rachel Cruz on social media, me at ChrisHogan360. We're all over the place on Instagram and Twitter and all the places. So send us your questions. We'd love to be able to talk with you. So, Rachel, you have been busy. Yes. And what's happening in the Rachel Cruz cruz world right now yeah well we talked

yesterday i'm back from attorney leave this is my first week back and we're kind of hitting the ground running we have lots of events lots of trips lots of travel coming up in march but some exciting stuff uh the crews we're doing yes uh that live like no one else cruise i think there's a few cabins left you can go to davrams. for those. And that's going to be a really fun trip, those of you in Baby Steps 4 and beyond, to celebrate together as a community. All of the Ramsey personalities, we will all be there in addition to some other people. And that's going to be a great time. And then we go on to the Smart Conference in Orlando. I mean, we're like in Florida back-to-back.

I feel like we should just live there. I am not moving to Florida. You should start an office there. I will go visit, Rachel. But listen, you mentioned the cruise. It's going to be a great opportunity for people to come out and celebrate because you have lived like no one else. Yeah, that's right. You've paid the dues and you got yourself in a position.

We're going to come celebrate. That's going to be March 22nd through the 29th. We will all be on the boat hanging out. I will be walking around with a very large life preserver. But we're going to have fun. We're going to celebrate. We've got a lot of exciting activities. Have you been on a cruise before?

Absolutely. Okay, so you'll cruise. Because some people are not cruise people. I'm like a veteran. And the Smart Conference. I want to tell you about this one because this is one of my favorite events, Rachel. We all have an opportunity to be able to speak. Dave is going to be talking.

Rachel, myself, will have Dr. Meg Meeker talking about parenting. Anthony O'Neill will be talking about youth and money. Ken Coleman will be speaking. I mean, it's just a lot of fun. And it's a family-friendly event. So if you've got teenagers, and I mean 12 and up, you should bring them out and have a day of learning. It's fantastic. Okay.

All right. Here's what we do. We take your calls. And so we want to hear from you. If you've got a question, give us a call. We're going to dive on the phone right now. We've got Levi on the line. Levi, how are you? I'm doing good, Chris.

Yourself? Oh, I'm focused and not finished, my friend. What's your question for Rachel and I? So I guess my question for you guys, thank you so much for taking my call. So me and my fiancé are currently trying to decide how our living situation is going to be after we get married. We are trying to decide if we should rent or buy. And currently we are in quite a bit of debt in the sense of she just finished her master's about a year ago, and she has about almost $100,000 in student debt.

And then right now her student loans are roughly about $600 a month, and I have about $600 a month in a personal loan that I got for consolidating my credit card debt. Uh-oh. So, yeah. So we're working through that. We're trying to live frugal and pay that off as quickly as possible. But the problem that we're having with the decision part of this is that it seems to cost the same to buy a house as it does to rent a house. And we're just not sure. Like she thinks we should rent. I think we should buy. And we're just trying to decide

what the best route would be. Okay. Go ahead, Rachel. Well, I was going to say, I mean, rule of thumb that we go by when it comes to just finances in general for you guys is keeping everything separate until you get married and then looking to say, okay, so once we're married again, what do we do? Rent or buy? So because you guys have so much debt, what we teach is you get out of debt first and get a fully funded emergency fund in place. Because yes, where the rent and the mortgage could be the same price. And in some cases, actually, the rent might be even a little more expensive than the mortgage. But that's not the entire, you know, that's not the entire bill. Because when you look at it, owning a home is very expensive. When you rent, a lot of the responsibilities and things that

happen to the home are not on you. They're on the landlord. But for you, when the water heater breaks, you have to take care of the lawn. I mean, there's so much home ownership. It's almost like the cheapest day you have it is the day you sign to buy the home. I mean, really, there's so much money. So the amount of risk that goes into owning a home when you have this much debt, and you guys have a ton of debt, you're not in a good position. I mean, it's going to stress you guys out out it ends up being a curse rather than a blessing levi how when are you guys getting married august okay in august okay so right now you guys

individually have your own budget and you're working your own debt snowball is that right correct okay who's more focused on getting out of debt, you or her? I'd say it's her. Okay. I was like, don't lie to us, Levi. No, you better tell the truth. Yeah, I'm here, yeah. I should be peed out a little bit more.

She's been doing a really good job. Well, I think, you know, I like that you guys are talking about this. And I would encourage you to get plugged in and go through Financial Peace University. You're going through it as individuals right now, because there is no we. OK, you don't get to speak French yet. You're individuals. But looking at this, but the mindset of I agree with Rachel, the last thing you want to do is compound the financial stress by adding a house on top of this. Renting is not a sin. Renting allows you time so you can save up and buy a home the right way. So get yourselves out of debt. Get intentional. Get on a budget.

Get really, really, really, really focused. Get out of debt. Then build up a fully funded emergency fund. And then, Levi, you're going to build what we call what, Rachel? Baby step three B. This is where you're saving up for a home down payment. So that's the process. And you guys can talk about it, but it's intentional.

You want to do it the right way. Yeah, absolutely. And I think, too, Levi, for anyone out there that when you're engaged getting married, I find that a lot of women, their top financial fear is the lack of security. So the fact that she's even wanting to rent for a little bit, she may say, okay, yeah, I don't want the burden of a house right now because of how unstable they are financially because of how much debt that they have. So Levi, my encouragement to you would be number one, she might be kind of freaking

out with the amount of debt that you guys have and getting you fully on board that you're not just watching, but you are participating and you're in it. You are committed. And so that changes the game. And for couples, young couples especially, when you can work on a huge financial goal together and getting out of debt is probably the top for a lot of newlyweds because debt is like rampant in our country. But when you guys can do something like this together,

I've talked to so many young couples and they get out of debt and they say, now we feel like we can do anything. And when you start your marriage off like that, on that kind of foot with this goal and you work together and you sacrifice together, it brings you guys a sense of unity versus running in two separate lanes and letting money just stress you out and freak you out. I mean, really working together. So Levi, I encourage you, I'm speaking on behalf of your fiance probably, like step up and push in with her, and you guys do this together in August when you get married. Absolutely. And here's the intentional thing. You want to utilize a real estate ELP when you

get ready to buy a home, because this is not an emotional decision. It's a business decision, and you want to go into it with your eyes wide open so you don't overspend. This is The Dave Ramsey Show. We talk about it daily. Character matters. When I'm looking for team members, I'm looking for men and women who have character. People with character care. They care about the work they're doing and they care about the people around them. That's why my team uses LinkedIn Jobs to find people who care about our mission.

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post. Visit linkedin.com slash Ramsey. Terms and conditions apply. Hello, everyone. You are listening to The Dave Ramsey Show. I'm Chris Hogan filling in for Dave Ramsey this hour, and I'm joined in studio by number one bestselling author and financial expert, Ms. Rachel Cruz, and we are excited to take your calls as well as your questions. We always talk about social media, and Rachel, you are absolutely super active on social media yes especially instagram i have a love hate relationship with it it is well it's it's a point i write about my book love your life not there social media it can be a blessing it also can be a curse so you want to use it

appropriately right i'm like it's just a place for comparison and we can go downhill quick when you start believing everything you're seeing on social media but But it's a good thing, I think, because you're able to connect with people, you're able to talk, so we're able to hear from people that we normally never would have. That's exactly right. And so what I want to do, you can find Rachel at Rachel Cruz. You can find me at Chris Hogan 360. You can find the Dave Ramsey Show at Ramsey Show on all the social media platforms. But I wanted to take a question real quick. This is from Alexis, Rachel, for you. And it says, my husband and I are on baby steps four, five, and six, and we're about to cash flow his degree. We don't have kids. Do we need term life insurance?

When it comes to life insurance, you only need life insurance if someone is dependent upon your income. So if you don't have kids, then I would say no. But if you do have someone that your income is helping, and if something happened to you, would that other person be out? So that's kind of the rule of thumb to look at. It really is. And so in this scenario, if they're trying to cash flow his degree, and let's say that he's working outside the home, and the wife is as well, well, they kind of got this situation where they are maybe depending on each other. And so from that, you want to have 10 to 12 times your income in term life insurance. It's really important. And the younger you are, the cheaper it is. And it's a great option. It's how you say, I love you to your family. And so if you guys are planning to have kids later in life, whatever, this is something to really get in place.

And you can learn more about this by going to DaveRamsey.com. You can click on the endorsed local providers under insurance and get more information. So, all right, if you're out there and you've got a question, we want to hear from you. So pick up the phone and call us. The number to call is 888-825-5225. Again, that's 888-825-5225. Kelly is standing by ready to take your call. All right, we're going to get to the phone line.

We've got John on line three. John, what's your question for Rachel and I? Guys, thanks for taking my call. I actually had the opportunity to meet you, Chris, in Gaithersburg for FBU. Ah, that was a lot of fun. That was fun. My wife and I definitely enjoyed it. Fantastic.

My question for you real quick is we are debt-free. We have our emergency fund completed. So that's a tremendous weight off our shoulders. However, we're 45 years old. I'm 45 years old. And we have zero saved for retirement. And we're currently renting and we want to buy a house. And I'm not sure how to go about tackling 3B, 4, and 5.

And I just wanted to get your input on about that. Very good. John, how much is your household income? We have a big shovel. We've been blessed. We make about a quarter million dollars a year. Okay. And you're completely out of debt now, correct? This month will be the first month where I don't pay any bills, any sort of consumer debt. Yes, John. That's so awesome.

What was the last consumer debt you paid off? My truck. The truck. All right. How do you feel, John? Is it worth it? Relieved, but I'm still nervous because I have so much more work to do. But here's the thing, John, and I appreciate you having that long-term view, but we got to celebrate that. You know, you all worked hard. You made a decision. You got intentional. You paid off debt. But what I don't want you to do is don't try to eat the elephant in one bite. And what I'm saying by that is the way to eat an elephant is by many bites at a time. So I want you guys to be able to celebrate and really understand what you've accomplished. But, yeah, you've still got some work to do.

In your area, are you all planning to stay in the Maryland area? That's the thing. Depending, we could be here no more than eight years and then maybe move back to where I'm originally from in New Jersey. Okay. But I don't know if I want to displace my four-year-old. What kind of parent am I to do that? So I really don't know, have an answer for you.

I understand. And the reason I'm asking is just from a tactical standpoint of you looking and understanding kind of the median home values in that area and what will 10% look like or 20% look like as a down payment. You mentioned you guys have a lot. What's the average home price there? I mean, for a keep, it's probably $500,000. I mean, it's ridiculous. You've been to this town.

It's insane. Yeah, no, it was a little serious there with them home prices. But looking at you, you've got a big shovel from an income standpoint. And so, you know, I think at minimum you guys need to strive for at least 10% down to be able to attack it. And then from there, get started on baby step four. Rachel, what's your thought for John? Yeah, absolutely. I mean, you guys are 45 years old.

You're still renting. You have a great income. And so being able to own an asset like a home that more than likely goes up in value for the most part, right? Real estate does. And so to be able to invest in that for your future and for you guys to be settled. So yeah, our rule of thumb too with buying a home is making sure that you're in the area for at least five years. And it sounds like that's the case. So I would, I would go ahead and invest in some property and instead of just renting because of where you guys are at, again, out of debt, fully fund an emergency fund, do that, and then you'll be able to put some

money after that into retirement. Right. And John, you mentioned you didn't want to displace your four-year-old. Come on, man. Four-year-olds are displaceable. They're resilient. They'll go wherever you take them. You know, you get into junior high and high school, then that's going to be a different

issue as they're making long-term friends. So yeah, your kid will be okay. You guys stay the course. I'm proud of what you've done. You've got some more work to do, but stay focused, my friend. You're not finished. All right, we're going to go to the phone line on line four. We've got Maureen on the line.

Maureen, what's your question for Rachel and I? Hi, Chris and Rachel. Thanks for taking my call. Marzman and I have a dilemma. We have 92K in student debt. We've cleared all our consumer debt off. I'm not employed, but his base pay is $128,000, and the rest of his income comes from Amazon shares.

And right now we have about $92,000 worth of shares. And I have suggested that we take those shares to pay off the student debt in one swoop. He is not comfortable with that suggestion. Why? He feels that doing so is pointless because we haven't, even clearing up our consumer debt, we were not always consistent from month to month. So he feels that we haven't properly established the right financial habits to help us take on baby steps to be in school once all debt is cleared. So we decided to call you guys and get your take on how you think we should tackle this.

Okay, Maureen, I got some background questions. How long have you all been married? We've been married 10 years. 10 years. Do you have kids? Two children. How old are they? Three and seven.

Okay. Three and seven. All right. And so you have $92,000 in student loan debt left. You've got $92,000 in Amazon stock. Yes. Okay. And how much do you all have saved toward retirement right now?

None. Nothing. Okay. All right. Rachel, what's your thought? Yeah. I mean, if I'm in your shoes, clearing up this debt is key because then you're able to put your income to other

things and more than likely, hopefully, his income will just keep increasing. But the fact that there's no penalty, you're not taking anything out of retirement to pay off debt, which we would not go for. But man, I would say if you're able to liquidate things and get out of debt, that's the route I would take. Yeah. How much are you all paying on this student loan debt, Maureen? So between his student loan and mine, we're paying $562 a month. $562. Okay. Of the $92, how much of this student loan debt is his? $62 is his. Okay. All right. And again, you all are making in this payment, the opportunity.

In his mind, he can't comprehend letting go of this stock, which is extremely volatile. Someone could hiccup or sneeze and the value go down versus what it would feel like to have this debt out of your life. So you guys need to have some conversations. And again, his mindset may be thinking futuristic, but your mindset is looking at the debt. And it's a great opportunity for you all to gain some clarity in sitting and looking at this. I agree with Rachel. Cashing that out and eliminating the student loan debt, you guys have an opportunity to

take the $529 that you were paying per month on the student loan and then start to apply that to a fully funded emergency fund. You've got an opportunity here. The key is to get in line and to get on the same page because a dream without a plan is called a wish. You need a plan. This is The Dave Ramsey Show. I'm Mike Pearson. If you do this one simple thing that we all do, you are literally at risk of being hacked and someone stealing what you've worked so hard for.

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You can try it for free for seven days. Protect up to seven internet devices and keep all of your internet connections secure. That's CyberGhost VPN. Download it today from your app store and be secure in seconds. Hello, everyone. You are listening to The Dave Ramsey Show, and we are having a blast. Rachel and me are taking your calls. They are debating on the grammatical

side of that. I will fight them later. Grammar police, actually, in that context, you used it. I'm going to put somebody on the headlock here in a minute. But listen, we are having an absolute blast taking your calls. If you've got a question, give us a shout. That number to call is 888-825-5225. Again, that's 888-825-5225.

Rachel and I are here for you. Are you a grammar police? Yeah, sometimes. You are? Okay. Well, yeah. I mean, you want things to be done. They stress me out in life.

I have zero grammar policeness on me, anyone, so you can use bad grammar. Here we go. We're going to go to Emma on line one. Emma, what's your question for Rachel and I? Hi, Rachel. Hi, Rachel. Hi, Chris. I was just reaching out because my husband and I, we got married in October here last year. And we've been, since we graduated college, we've been on the plan following Dave Ramsey's steps. And we've been saving to buy a house and we have quite a bit saved up. I think we're

sitting close to 165, 170. And we are looking at houses, but it is such a seller's market. We've been kind of resistant to pull the trigger on anything. And I haven't really investigated looking into loans yet just because we're really wanting to reach that goal. So just kind of curious on your guys' feedback on that because it is such a volatile market and you can't really know what the future holds. Sure. Well, Emma, you guys have been married four months. Do you have any consumer debt? No, we are both totally out of debt. Amazing. And do you guys have a fully funded emergency fund of three to six months of expenses? Yes. And that's outside of... That's amazing. So you have like $170,000 saved outside of the emergency funds, correct?

Yes. You guys are an incredible spot. Absolutely incredible. Well, the way we look at it is that you are in a great position to buy. I mean, we always say to put at least 10% down. So doing that is the rule of thumb. And yeah, sure. It's going to be somewhat volatile, but over the scope of time, the housing markets, you'll get equity. Hopefully it goes up. That's a pretty safe investment as real estate, just like a home, right? A residential home. So that is something that you guys definitely can. But you know what? I would even pause. I mean, you guys have been married four months. I would wait till October, go through the spring, go through the summer and enjoy your first year of marriage. Because once you start home ownership,

we took this kind of call a few segments ago, but it's expensive. I mean, it is so expensive. You're going to have things that break. You're going to have upkeep and maintenance that when you rent, the landlord takes care of. So eventually I want you guys to be able to purchase a home and you're well on your way. But I think just for like the stress point of you guys being newlyweds, I think it's okay to kind of take a breather.

You're just out of college. You're young. You guys have so much time. Be married a year before you decide to purchase. But don't be afraid to go into the housing markets because it is a great investment. Yeah. And you guys want to go into it with your eyes wide open, as Rachel was saying. Doing your homework, looking at this, understanding the schools, districts for where you buy,

if you guys are going to have kids or how long you plan to be there. And then you also psychologically have to get prepared to be able to write that check. And that's a process, you know, because you guys have been intentional. Where did this money come from? The $170,000? Well, we both, he had a decent amount of debt out of school, but he paid it off within a year of working. He was able to stay at home with his parents.

And then I graduated with only like, I think, $3,000 to $4,000 in debt. And I paid it off within a few months of graduating. So I've been making between $35,000 to $45,000 now for the last two to three years. And then he's made from between $50,000 to $70,000-ish with a few extra jobs. You all have been very focused on saving. Yeah, we definitely are ready to start thinking about having a family, and it's like we're resistant to move towards really being serious about having kids until we figure out the house stuff,

just because it's such a big hurdle. Emma, and let me take another step, because this is something I wish someone would have asked me. When you guys do begin to have a family, are one of you planning to stay home, or are you both going to be in the workforce? I'm planning to stay home, and so that's another part of the equation. That's right. With saving and then

figuring out with if we would even want to do a loan because the housing market is still kind of at least right now it's a seller's market definitely and there's not many options and the options that there are pretty highly priced so well it's hard to sit on that much money liquid no i know i know but not because you've got this this money has an obligation and it's hard to sit on that much money liquid. No, I know. I know. But not because you've got this. This money has an obligation and it's called home. Okay. So that's not something to go fritter away. But here's the crazy thing.

You all financially will go in with the bank and you will qualify under both of you making an income. I want you all to be mindful of if you start a family and you're coming home, then you're existing off of his income, right? And so you guys need to look, and it's not a matter of what you qualify for, because the bank is going to tell you you qualify for some ridiculous amount, more than you all are wanting. I want you all to remain in control. And again, it's that two to four year decision. I want to look out two to four years and think, what do I need to do right now to put myself on that path? So thank you for your call.

But I just want to caution you with that. Yeah, that's a great point, Chris, is that so many couples go in and they do this plan and they have a great down payment and they're making great money. And you sit down and they tell you, oh, well, you can get X amount house. And you kind of start to get, oh, that's exciting. That's cool. We weren't even thinking that. But it's the couples

that pay off their house fast are the ones, yeah, we qualified for a whole lot more, but we still got a house within reason. We did not take the advice of the mortgage lender

and get this huge house. But it can be exciting. So you could be sitting in there thinking, oh, well, that's what we could be in. But it may not be smart for you guys. So have your goal

of what size house, what price range, no matter what the lender says that you guys can have. And stick to it. All right, we got Jennifer on line three. Jennifer, how can we help you? Hi, guys. I'm so excited to talk to you guys. Well, thank you. We're excited to talk to you too. What's on your mind? Well, my husband and I have been gazelle intense since July of last year. We've so far paid off almost $70,000, and we have about $80,000 to go. Okay.

So no life. We have three boys, and this is my question. We don't agree with whole life insurance policies now that we have been, you know, aware of that's not a good type of life insurance. We have termed through Xander. And so going back to when my kids were born, my in-laws decided it would be a great idea to get life insurance policies on my children, whole life insurance policies, as a gift to them.

So when they become adults, if they want to cash it in, then they can use that to buy a car for college or whatnot. But now that we're in this situation where we know that whole life insurance policies are not the way to go and not the way to save for the future, I'm not sure if we should talk to them about possibly getting rid of them and putting that money towards, you know, um, mutual funds. Uh, because also my mother-in-law has recently retired. So now her income is gone. She has a pension and my father-in-law has been disabled for the last 20 some years. So now they're in their income has gone down and they're paying that monthly or that yearly premium. And I hate for her to do that knowing that the money is not going anywhere.

Right, right, right. Yeah, I would absolutely sit down. I would and show them, hey, here's the math and you can just do an investment calculator or even just online of what it's going to be if they cash it out at 18 years old, that whole life policy versus if you took the money out and put it in a good growth stock mutual fund and just let it grow, you know, even 10, 11% and just look at the math. And for them, they're doing this because they're being, they're generous. They care about you guys. And they think, Hey, this is a great way to bless our grandkids, which is such a gift. Like how that's amazing.

And to say, Hey, we so, so appreciate your thoughtfulness and this gift, and we are beyond blessed. So thank you. But as we're looking and we're digging into our own personal finances, we've recognized and we've kind of educated ourselves that, hey, maybe a whole life policy isn't the best way to use this money. How would you guys feel if we cashed it out and put it in this? And if you guys ever want to attribute it, you can put more in that if you would like. But then that way it just grows and we're not even dependent upon you all putting money in. That's exactly right.

Because, man, your kids will have so much more money at 18 through a mutual fund than a stupid whole life policy. It's unbelievable. Stay tuned, America. This is the Dave Ramsey Show. Thank you. Hello, everyone. You are listening to The Dave Ramsey Show. I'm Chris Hogan filling in for Dave Ramsey this hour. I'm joined in studio with national bestselling author Rachel Cruz.

And Rachel, your recent book, Love Your Life, Not Theirs, is still flying off the shelves and really digging in. I was talking about your book when I was talking to a friend of mine about contentment, just this mindset. Yes. And I've quoted you several times. Well, thank you, Hogan. I quote you and I give you credit. Sometimes you give me credit. Unlike you said yesterday.

Sometimes you give me credit. Always. But you say a budget gives you permission to enjoy. And I think this is one of those things that people, that's a common misconception about a budget. Yeah, a budget is permission to spend. I mean, I for so long resisted a budget because I feel like it was so, you know, you were like constrained. It was cheap. You couldn't do anything fun.

And finally learning, no, a budget actually allows you to enjoy your money spend your money but it's in control and so you can go shopping go to the grocery store whatever it is and you're never again gonna think is this okay like should we do this i don't know it's so clear right there i mean even our kids uh our oldest now she's only four but all the things you can do for a four-year-old, from swim lessons to camps in the summer to soccer at the YMCA. I mean, there's all these things. So we had to start a little line item for her of activities. And there was something else I wanted her to do this summer.

And we looked at the budget. We're like, no, we don't need to do that. She has two other things going on. We're fine. But it just kind of makes the decisions for you. And it gives you boundaries and limits so that when you are doing the things and spending the money, you actually can enjoy it. Fantastic. Tell everyone where they can get a copy of this book. Yeah, Love Your Life Not There is rachelcruz.com, daveramsey.com. Fantastic. There it is. Or

anywhere books are sold. That's right. All right. We're going to get back to the phone. We've got Dalton on line one. Dalton, what's your question for Rachel and I? So thank you for taking my call, first of all. I appreciate being able to speak with you, too. Sure. And so my question, we just completed Baby Step 2 and then also Baby Step 3 right there after that. Great. And then literally the week after we finished Baby Step 3, my wife just hit a layoff. So we're trying to figure out if we should continue to build

because we're able to still continue after that with my income or if we should just put everything on pause and just go from there. Okay, tell me this. How much debt, Dalton, did you all pay off? It was $28,000 in eight months. $28,000. What kind of debt was that? It was student loans.

It was an auto loan. It was credit cards, everything that a 24-year-old would have at that time. Yes. Okay. And what was you all's income when your wife was working? About $75,000. Okay. And how much, what's the income now that she's been laid off?

About $58,000? About 58, 60. Okay. Still doing pretty well. Okay. She was only making about 15? Just about, yeah. She's working part-time while she's in school completing her part-time job. All right.

So your question is, do you pause everything because she's laid off, or do you stay focused? Is that your question? Yes. Okay. Well, I mean, I'm going to tell you this. I mean, I think you absolutely have to stay focused in Is that your question? Yes. Okay. Well, I mean, I'm going to tell you this. I mean, I think you absolutely have to stay focused and looking at this. And thank goodness you got

yourself out of debt and built up your emergency fund. I think the mindset needs to be for her in looking at this and then finding some employment, meaning having some additional income coming in so you guys can continue to work through these baby steps and uh dalton i mean what uh is she in the active hunt right now or is she just kind of reeling from being laid off she's she's actively hunting for the next next big thing but just with everything that had happened so quickly it's just all so much at once we're just trying to pick up the pieces while they're still there well i can imagine can imagine. And I think it's important, Rachel, for him, especially as a husband, to make sure that he's talking with her and hearing how she's feeling. Because that's got to be a shock to their system and very frustrating. Yeah, absolutely. But Dalton, you're in a great

place. This is why you get out of debt. This is why you build up an emergency fund. So when things like this happen, it's not a crisis. It's an inconvenience. That's right. And you guys are like, oh, man, 15 grand. It'd be nice to have. We don't have it. But, hey, you're living off, you know, what was it?

58? 58 to 60. Yeah, to 60. I mean, you're making 60 grand. You guys are killing it still. Continue on. And then if she gets some extra money on the side and gets a job and that's extra bonus, you know, you can see to put in the pot.

But you guys are doing great. I would not pause it now if it was reversed and you guys were only making 15 and you lost your job this would be a different conversation um but when you yeah you guys are killing it and and if you need to dip into the emergency fund for something that's why it's there it hurts to get we talked about this yesterday right sometimes hurts to get in the emergency fund because you're like no no i just want to keep it there but if if you guys need it, that's what it's there for, and then build it back up. And, Rachel, here's my biggest tip. If you end up using that emergency fund, job one is pause everything and replenish it.

A lot of people don't do that, and so they end up falling off, and then they run out of money. So, Dalton, thank you for your call. All right, we're going to line four. We've got Jennifer on the line from Virginia. Jennifer, what's your question for us? Hi, thanks for taking my call. So my husband and I are going through a very amicable divorce right now, and I just closed on my rental property.

And so on Wednesday, I think I'll get $102,000, which goes 100% to me, minus taxes. I'm assuming about 35% of credit card debt. Cars are paid off. My living situation is I'm in the marital home, and we're going to share the expenses for the next 10 years. So my living expenses for the month will be about $2,500. That's including half the mortgage, all my utilities, including cell phones and everything. So my question is, do I take the $102,000 and

completely pay off all the debt, start an emergency fund or establish it, and then put the rest in, I don't know, an IRA or something? Okay. I just want to know basically what to do with this big lump sum of money. Right. Absolutely. Rachel, what's your thought? Yeah. And how much debt? You guys have $35,000. Is that what you said? I'm assuming $35,000 of it. Of credit card debt. And you're getting all of that? So you will have $35,000 of debt after the divorce and everything is final? Correct. Yeah. I would definitely take that and I would throw it at the debt. Go ahead and do your emergency fund, just like you're saying. And then whatever's left, look into retirement accounts for sure, because that's going to leave you in a great spot. Are you working? Oh yeah, full-time. And I have, I have retirement. I think I contribute about 17% each paycheck. And then I have another

IRA that's like 130. And how much do you make a year? 125. Oh wow. Yeah. Yeah. I mean, you're, you're in a great spot. I mean, you're in a hard spot emotionally, Jennifer. I mean, this stuff is draining. And how long were you guys married? Married for five, but friends for 20 years. Oh, wow. Do you guys have kids together? No.

I have a nine-year-old and a 22-year-old. So my 22-year-old at college, he's doing the, we had put into a 529 for her for college already. So her college is paid for. She's a senior. That's not an issue. Yeah, that's great. But I do have a nine year old. Sure. Well, to answer your question, yeah, I would take that 100K, pay off the credit card debt, get your emergency fund in place. And then also like, you know, that's the tactical financial side. But for yourself, you know, this is a hard thing. I mean, any type of marriage that ends,

no matter what length of time you guys have been together, it's sad and it's hard. And so to make sure that you're taking care of yourself on that level. Yeah, Jennifer, you definitely want to make sure you've got some people around you, a good church that you're attending, or some people to support you. That's going to be crucial. Let me ask you this. How much credit card debt did you guys have together? It's probably 74. Okay, so they kind of split it down the middle? Right. Is your name on the other credit card debt? Did you all have it jointly?

We did. Okay. We did. And I'm going to tell you this because it's going to be very crucial. You need to make sure in the divorce decree it details what you're obligated for very intentionally because you may get calls from the other death that you're not responsible for. So you want to make sure you're able to defend yourself and be crystal clear on the checks that you send to pay off the $35,000 that you are responsible for. Make sure those are cashier's checks, that you keep a copy of those photocopied and keep a file of that. That way, you're clear on what you've done and what you're obligated to do moving forward. I do like the

idea of maybe parking that money for a little bit just in a money market account. You've got your fully funded emergency fund. I don't want you to make any decisions yet. It's okay for that money to sit still for three to six months till you get your head clear and you understand, okay, am I investing this or what am I doing as I move forward? It's just a good rule of thumb. Anytime you come into some money like that, you don't want to do anything haphazardly or too quickly. You want to clear your mind, understand where your heart is and what your plan is, and that

way you're able to move forward with absolute confidence. Thank you very, very much for that question. Well, Rachel, thank you for taking the time to join me. Yes, thanks for having me. It was absolutely fun. I want to thank you, everyone, for calling in, all the callers, and you for listening. I want to thank James Childs, a producer, Kelly Daniel, associate producer, and I want to thank just everybody for tuning in.

We've got an absolutely fabulous in-studio audience. Thank you all for coming out. This has been The Dave Ramsey Show. Hey, it's Kelly, associate producer and phone screener for The Dave Ramsey Show. This episode is over, but if you heard about

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