The Ramsey Show - App - What Should I Do With the Stimulus Check? (Hour 2)

Episode Date: March 30, 2020

Rachel Cruze, Career, Budgeting 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 Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. Thanks for joining us. Rachel Cruz, Ramsey personality, best-selling author, joins me this hour to answer your questions. Rachel, crazy times. People are asking a lot of different questions, and they're revisiting what principles they've been using to handle money to this point.

If you've been handling money similar to the way we teach, you're feeling pretty good right now. You've got an emergency fund. You're out of debt. And you're not nearly as freaked out, at least about the financial part of what we're all facing. You may be freaked out about the medical part, but no one can prepare for that except maintaining your health, obviously. But the financial part is financial peace. Two words that don't go together. Yeah, it is a crazy time,

and I feel like the people that I've talked to that have not done this stuff, they are still living paycheck to paycheck, and they're in debt. They've been living above their means. I want to always challenge them and say, hey, this could be your wake-up call. And to have the same sense of urgency that they're probably feeling now, translating that to when all of this, because it will all be okay, when life kind of returns back to normal, to not forget that feeling and just go back to your normal bad money habits, but to really make a pivot and a change. Let this be your catalyst.

And then those that really, man, have done really well, like you said, and are out of debt and have an emergency fund, this is a time that you get to not only just have peace, but you're able to be really generous, and you're able to help serve and even just give literal money to places or people that need it because you have that bandwidth. It's really fun to be able to give in today's environment. Yes. To just, you're going through the drive-thru, because of course that's all there is, and whatever it is, or you're picking up some steaks from the steakhouse that are selling them, or however they're doing it, and just leave an outrageous tip in situations like that.

Because the folks that are in there are some of the few that are left in that company, that restaurant right now. And they're scared they're getting ready to be losing their job in a week. Yep. Because the restaurant may not survive the downturn. And so it's really tenuous times for people that are paycheck to paycheck. And, you know, what's interesting is you have a great – my grandparents had the Great Depression. That was their wake-up call, and they became savers and frugal and budgeters,

and everything is a result of that. And my theory has always been that everyone has their own Great Depression. Sometimes it is a worldwide event like this one. Sometimes it's just a personal event. You just go through losing everything because of a bad divorce or you go through losing everything like I did because you were stupid in business and borrowed too much money. And that was my Great Depression, meaning it was my turning point, the time I said enough.

Yep. I'm not living like this. And so the bad news is some folks are going through that right now. The good news is this can be your moment. Absolutely. This can be your enough, I've had it moment. And, you know, one of the things we did last week was this message of hope on Thursday night, you and Ken Coleman and I, and, um, uh, uh, and so what we decided

to do was each of the Ramsey personalities, the other six of them, uh, not including me, in other words, uh, are doing their own message of hope unique to their brand and the areas that they work in. Uh, Dr. John Deloney being Dr. D being our latest newly minted Ramsey personality, and they're posting them, uh, doing a live message, and then they're posting them on all of the different social sites. In other words, Rachel's will be on mine and Hogan's and Anthony's, and Anthony's will be on mine and Hogan's and Rachel's, and so on.

The podcast's everything. The podcast's everything. It's going to be everywhere, including XM Radio is going to be carrying them. And so you're doing yours tonight. Yes, so mine is tonight, and I'm focusing mine on what to do with your money right now because there were so many questions, depending on situations, and answering some of the most asked money questions that we're getting. And so kind of just revisiting the money topic. We said it Thursday night, but I still feel this way of like we're not health professionals.

We can't really speak into that whole world. But we are professionals when it comes to helping you with your money. And so that's what we do best around here. And your careers and in John Deloney's case, even your anxieties and the things you're facing. But for me personally, it's money. For you, it's money. Yeah, I can't. Yeah.

So being able to kind of loop back around on that and talk about some of the stuff a little bit when we talk Thursday night. But I'm kind of in a new take and a new challenge to people out there. So, yes. And my message of hope, the series begins tonight and I'm the first one up. So tonight 7 o'clock, my YouTube channel and Facebook and all the other personalities including yours.

I never know to call you Dave or dad on the air. I was about to say Dave, but yeah. On yours as well. So, and we will replay them on all social channels and podcasts. So was about to say Dave, but yeah, whatever. You can do whatever you want. On yours as well. And we will replay them on all social channels and podcasts. So make sure to check it out if you just need a little bit of a shot of hope. Because I feel like we all do. It's there for you.

Well, and it's based in reality. It's not based in just clueless positive thinking or something. But there's a truth that we do have hope. And to be able to speak that boldly right now in a time of chaos is just really really important for our country you know when we were when you were a baby and i was going through bankruptcy some friends sat down with me and he looked at me and he just very quietly said you're going to get through this well i already knew i wasn't going to die from it it was bankruptcy it just was really painful and horrible and losing everything and scared about paying the bill with the babies in the house

and keeping the lights on, which had already been cut off once, and that kind of stuff. But it was just interesting for someone to speak the power of the tongue, the Bible says, just to speak that and calmly. And he believed it. He knew it. He was an older guy. And he just said, you to speak that and calmly. And he believed it. He knew it. He was an older guy. And he just said, you know, I was 28,

and he was looking at me across the kitchen table, and he said, you're going to get through this. Now, he didn't guarantee me it wasn't going to get worse before it got better. He didn't guarantee me it wasn't going to be tough, that there was going to be pain. He didn't guarantee me there weren't going to be bumps in the road or a scar left or whatever, but I was going to live through it.

And, you know, if you've been laid off, you're going to get through this. If you've been furloughed or you're afraid you're going to be, you're going to get through this. And that's the truth. That's not just think positively and it will all be okay. No, I mean, you may have to wade through waist deep or ankle deep in some poop to get there i don't know there's some manure out there right now man and the only thing i'm sure about with manure is it grows things so um you

know every time i get in a mess like this something good comes out of it along with the bad and so it could be that it's just your wake-up call it could be that you were doing ramsey ish and now you're going to get serious it could be uh that you learn something about yourself and your own character on how you've dealt with this fear yeah it could be a lot of different things check daveramsey.com slash hope by the way we're adding new free things every day today we added a smart dollar feature smart dollar is is what companies use to teach our curriculum to their employees. For instance, all of Costco has gone through it and that kind of a thing. If your company has laid you off or if you are a company that has laid people off,

for the laid off people, we're going to furnish SmartDollar free. And so if the company contacts us, all the people you've had to lay off or furlough, we'll furnish Smart Dollar free so they can go through this curriculum while they're trying to bounce back themselves. Check it all out. It's right there at DaveRamsey.com. business leaders hiring right now may be the furthest thing from your mind but the fact of the matter is we will recover one of the smartest things you can do for your business is to be prepared. I want you to know my friends at LinkedIn are ready to help you find the right people for your business when you're ready to hire them. LinkedIn Jobs matches your role with qualified candidates

so that you can find the right person quickly. LinkedIn Jobs looks at things like collaboration, creativity, adaptability, and puts your job post in front of qualified candidates every day. So your job is seen by people looking for jobs like yours. That's why we use LinkedIn Jobs when we hire here at Ramsey. When the time comes to hire for your business, you can get $50 off your first job post at linkedin.com slash ramsey that's linkedin.com slash ramsey terms and conditions apply mitchell is in Georgia.

Hey, Mitchell, welcome to the Dave Ramsey Show. How can Rachel and me help? Hi, Dave and Rachel. It's great to talk to you all. You too. What's up? Hey, my wife and I are in baby steps four, five, and six. And I just want to say thank you for your help and showing us how to get there.

But I'm in the Army, and so my income isn't affected by the coronavirus. My question is, if we actually get $3,400 in a stimulus package check, what should we do with that money? Should we walk it down the baby steps or give it or just spend it and put it back out into the economy? Yeah, I would say definitely walk it through the baby steps. I mean, being able to invest some extra right now is great if you have the ability to, and you do, because you have no debt and a fully funded emergency fund. So putting extra money in the

market right now is not a bad gig. And then throwing some more at the house. Do you guys have kids? Yeah, we have two kids. How old are they? One and three. Okay, so yeah, you've got babies. And then do you have a college plan set up for them? We're just getting that started. This money would go really good into that. Yeah. Because that's where you are.

Baby step four, you're already doing 15%, I assume. Five is kids' college, and you've got babies, and you're just getting it set up, and the market's on sale right now. You know, the stock market's down. It's a wonderful time to buy and get your kids' college, get that money working for you for your kids' college. I think that's perfect. It's exactly what I would do with it. Okay.

And take even, I mean, even a little bit. You asked about the give part. If you want to give some of it. Yeah, and I think a small, yeah, taking a small bit and finding something right now to be able to give to, I just think that's so powerful. We are encouraging people past baby step three. This is something that you're in a position to be able to give as well. So I wouldn't count that out completely. Yeah, definitely.

I mean, we take income as evangelical Christians in our home, and we tithe on it. Anything that comes our way is income. And so to our local church, and if you're not doing that, at least take 10% of this then and, you know, increase people's tips somewhere or find somebody that's just, you know, that's just gotten laid off and pay the rent this month for them or whatever, that kind of a thing, depending on what the rent is. Now, I have heard people, whether it's with the stimulus check coming or just extra income ask the question should i spend it to help fuel the economy and yeah because he asked you yeah he asked that and so that's not patriotic that's not

right the thing is if you are smart for your family and you do something wise for your family you have properly supported the united states of america by taking care of your family and you do something wise for your family, you have properly supported the United States of America by taking care of your family. And so you are not required to go buy a bunch of crap to say you were patriotic. That is no, we're not going to ever go there. And not that Mitchell was saying that.

No, I'm not saying he's saying that. I just, I've heard that a lot. We used to get that on some other stimulus check that came out. I guess that was back in 2008. People were saying, I feel a moral obligation to stimulate the economy. Yeah, right.

No, I don't at all. I'm not worried about it. Believe me, enough other people are going to do that. You don't have to worry about it. You're stimulating the economy by paying cash for your kid's college because you fund their college fund. It's just not today's economy. It's tomorrow's economy. So, hey, thanks for the call.

Open phones at 888-825-5225. Peter is on the line in D.C. Hi, Peter. How are you? Hey, Dave. Doing well. Thanks very much for taking my call. Sure.

What's up? So I have a question about rent. My rent is currently about 22% of my take-home pay, so I'm right in that sweet spot. That being said, I'm going to be taking a lower-paying job for one year, and then after that year, I'll be right back at my current job, making about $25,000 more than I do today. Why? But here's the thing. Sorry? Why? I'm a lawyer, and I'll be taking a job as a clerk for a federal judge. Oh, okay. I got it.

That makes sense. Good career track. It is. It is indeed. But the thing is, during that year, my current rent would be about 54% of my take-home pay. I do have a written budget. I worked out that I'd be able to cover rent and expenses, but I wouldn't have much margin. So my question for you is, do you think I can stay in my current department or do you think I should look for a new place during that year? If I recall, I don't know a lot about

it, but if I recall, clerking at that level is a pretty strenuous job. It is. Like a lot of hours. It is. Keep you pretty busy. Like not time for an extra job? I might be able to do a little career coaching, like law school tutoring on the side. Do you have any money in savings? I do. I have about $20,000. Okay. So you could name some of that your emergency fund, and some of it I'm going to supplement my income and add some extra work to this equation.

And between the two, the ratios would change dramatically, wouldn't they? Yeah. Yeah. That's what I was thinking. Something like that. I mean, like if we said, okay, we're going to name $14,000 the emergency fund and $6,000 is $500 a month for 12 months to supplement. And I'm going to work extra and bring in another $500 on the side. And it's going to be a really tough year, but I'm willing to take this step back because once I've got this on my resume, it really moves my career along, which is I'm assuming why you're doing this, right?

That's right. Yeah, that's right. The connections and the resume notch in your belt from clerking for a federal judge is a big deal, if I remember right. And, Peter, are you planning on staying in D.C. after this year? Yes, I'll be going to D.C. Okay, long term. So I think that's key, right? Yeah, if you're going to move, you've got to move anyway. So, yeah, that's another good question.

I'm trying to keep you from moving if you can, but I'm okay with you moving. It's not the end of the world. Yeah, I'm trying to keep you from moving if you can, but I'm okay with you moving. It's not the end of the world. It's just expensive emotionally and financially both to make a move just for 12 months. When you've done a good job of saving, you've obviously got the budget dialed in. But, no, 54% is not sustainable long-term unless you've got some way to cover it. The good news is it's only 12 months. You've got some money to supplement it, and you can add some money to it with some extra work. You do all of that, I would say you'll be able to stay. It seems

to make sense in my mind. It's a pretty cool move too to clerk for a federal judge if you're an attorney. If that's the world you want to be in, then that's a pretty serious opportunity. And just to tack on that, what he's going to have a year after this is pretty realistic. Some people take a job cut hoping, oh, maybe one day I'll get to do X, Y, and Z and make it back to my income level. But this is a pretty absolute, which helps the answer as well. Exactly. It is.

It's very dialed in. Yeah, it's pretty buttoned up. It's not a hope. Yeah, it's not a hope. It's going to happen. I think this is going to work out. Right, right. Yeah, you're right.

It's a good point. Good point. Katie is with us in Ohio. hi katie welcome to the dave ramsey show hi thank you how can we help so i'm a high school senior that i'm planning to go to college in the fall and i'm currently taking your foundations and personal finance class for the high schoolers. And in that course, you recommend that we pay cash for college. And I knew that college was going to be financially hard on my family. So I've done all that I can to stay out of debt. I've taken over 30 college credit classes, which is about one year of college. We've denied all of our student loans.

I've applied for every scholarship available for me. I will be doing work-study programs. I currently hold four part-time jobs. I do not have a car. I'm not paying any payment on that. I obviously don't have a house. I have no debt. I save up for what I need, and I pay for it in cash. My parents work between them seven jobs as first responders and they're generally out of debt. They have no student loans. They've saved up for me to go to college. We've both taken your financial peace classes. We're wise and responsible with money, but we still cannot afford to pay for college in cash. Why not? Everything you described,

it should have easily. Where are you talking about going to school? What's the tuition expense? I'm planning on going to Liberty University in Virginia, and it's about $36,000 a year. Yeah, so it's about four times what you can go to the University of Ohio for, so you can't afford to go there. Right, but it's a big priority for me to gain a Christian education. Well, it's not a big enough priority to go into debt for it. And Katie, let me just encourage you on that end. I went to the University of Tennessee, public university, and as a believer, still kept my faith, had an incredible community.

Actually, I'm with my husband in a local ministry that we had there in Knoxville. And you can 1,000% still walk with faith and have a relationship with Jesus and go to a public school. So some people, that's what they yield to the Christian education. Well, I like you being taught with a Christian worldview on everything. I think that's wonderful. And the Falwells are friends of mine. And I'm a big supporter of Liberty, but I would never tell you to go into debt to go there for that reason. So, you know, the only issue you've got is college choice is not within your budget,

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Thank you for joining us, America. We're glad you're here. Open phones at 888-825-5225. Join Rachel Cruz for her message of hope, part of our series with the Ramsey personalities, each doing a message of hope. Tonight, Tuesday night, is Hogan. Wednesday night, Christy Wright. Thursday night, Dr. John Deloney, Dr. D.

Friday, Ken Coleman. And next Monday, Anthony O'Neill. Each of them will be posted on each other's Instagram, Twitter, YouTube, Facebook, and so on. So you can find them. But Rachel's will be done tonight at 7 p.m. Central Time. What to do with your money in the midst of these wacky and weird times our question of the day comes from blinds.com they have a 100 satisfaction guarantee even if you mismeasure you pick the wrong color they'll remake your window blinds free free samples free shipping and with the new promos they run every month you'll save even more

use the promo code ramsey to get the best possible deal Free samples, free shipping, and with the new promos they run every month, you'll save even more. Use the promo code RAMSY to get the best possible deal. Rachel Christine in North Carolina says, I've been putting 15% of my income away in my 401k. The market's been dropping, and I lost a lot of money. Should I decrease my contributions right now, or should I leave it and continue to invest 15%? It's like the number one question we're getting. It is. Do I take money out of the market?

Do I stop investing? No, considering I'm assuming that you are doing the baby steps and you have no debt and a fully funded emergency funds. Just keep on at that 15%. This is the time to buy when you're in this position and you have the money to do it. One hundred percent. Keep going. Don't freak out.

Don't panic. Definitely don't take money out of the market. And I wouldn't contribute less because of it. In fact, contribute that 15%. I mean, I wish I could say even more if you were in that position. But, man, it's just the time to buy. Yeah, if you're sitting on extra money for some reason, and you're completely debt free and baby steps seven

and you got 50,000 bucks in your checking account, I would place an order for some mutual funds today. But otherwise I wouldn't increase. But that 15%. Sure. Yeah. 15% is where you are. And Christine, here's a rule. Okay. You got to remember this. You haven't lost any money until you sell. And in the stock market world, we call that locking in your losses. So you've only lost money on paper, and so you haven't really lost money yet. And so let me give you an example, okay? If the stock market goes from $30,000, which it was at, down below $20,000, which it has done, and it returns to $32,000, did you lose money? No.

You went for a ride on a roller coaster, and you didn't get off in the middle of the ride. That's all that happened. And so that's what happens during these times. And historically, if you get with one of your SmartVestor pros, as an example, and ask them to send you some of the history, there's some interesting history pieces that the mutual fund companies put out. Actually, you could go to their websites and probably get them, American Funds or Vanguard or Fidelity or, you know, like the always has been historically a rebound, like 90% of the time. There's a dramatic rebound in the months and even year following.

And so it's like the worst possible time. Not only are you locking in your losses if you get out now, but you're missing out on one of the biggest increases that you would have seen historically. And so there's some really interesting charts to read over that's like, you know, following the wall falling after the Cold War, following 9-1-1, following 2008, following whatever scare there was. Interesting one in the 50s, the the stock market went down and this will almost make you giggle you probably don't even know this unless you know your history okay but in the 50s the russians were the first to put a satellite in orbit i didn't know that you remember the name of

it sputnik good yeah you did it good i know that because of a Friends episode. You're welcome, America. Oh, no. You're welcome. But keep going. Keep going. Your academic prowess for history is from Friends. Well, you've watched Tiger King. We are screwed, America. We are screwed. So what happened after?

Because Americans were disillusioned that the Russians were winning the space war. So it went down. The space race. Is that what you're saying? So the stock market dove because businesses were like, oh, the Russians are kicking our butt. And then guess what? When we were the first to put a man on the moon, stock market went up. Okay, so I'm winning that race, right?

But, I mean, every time there's a negative or a positive event outside, the only time we really make it a huge focus in our lives is when the negative or positive is huge. Actually, they don't even make the positives huge. Right. Just the negatives. That's right. Just the negatives. Only if the world is coming. Actually, they don't even make the positives huge. Right. Just the negatives. That's right. Just the negatives. Only if the world is coming to an end.

And here's the deal, too. I mean, I think about Christine, and I'm going to just assume that you're not a financial planner by trade. And so when you are someone that's not in this world day in and day out, your natural fear takes over when it takes a dip. You naturally just want to pull your money out. And then when it goes good again, and you were okay now it's better now i feel safe and i can buy back in then you lose like you're saying all the growth and everything so um again it's buying

it's buying high and selling low which will make you not ever make money that's right that's exactly right you want to buy low and sell high stay in it or better, buy low and never sell. So I have never sold in 35 years of investing. I have never sold a mutual fund in a down time because I was scared. I've ridden all the way back there into the 80s. I've ridden 1987, Black Monday, market crashed, came back. You know, I've never sold after 9-1-1. I didn't sell because of Y2K. I didn't sell. And you know what? That money has turned into a lot of money because I just let it sit there and grow. I just left it alone and continually added to it. And so the moral of the story is the only time we ever tell someone to sell,

to take your money out of your retirement or something like that, is if you're facing a foreclosure or a bankruptcy, which you should not be to date because of the coronavirus. Because there's very few people have lost a job in January and now their house is in foreclosure in May, you don't get foreclosed on for being one month behind. So you're not in foreclosure. Let's pretend you get a month behind right now. I still wouldn't cash out your 401K. That's not a foreclosure or a bankruptcy yet.

Because next month you may go back to work, or you may find one of these nine gazillion jobs that are out there today that are hiring like crazy in the middle of this, and you may be able to pay your mortgage and catch up. I mean, if you had to pay two payments in May because you didn't pay your payment in April, that's not foreclosure or bankruptcy. I still would not cash out your 401K for that.

I think you can make that up with extra jobs, and you can make that up with a super tight budget if you get back to work and turn it around. So, you know, even in that case, I'm not going to cash it out. Now, if you're six months behind and they're going to foreclose Tuesday next and you want to cash it out a week early to keep the foreclosure from happening, yeah, I probably would do that. If you've got substantial equity that you're trying to protect on your home, that kind of a thing, then yeah, you're've got substantial equity that you're trying to protect on your home. That kind of a thing, then, yeah, you're going to have to. And you're going to take a bath with, you know, penalties and taxes and other stuff.

But that's a really, really good question. And I get that a lot, especially people who just started investing. You're just like you were all excited about it and now it's like bummer oh yes oh well you just look at the numbers right you sign into your account it's like oh gosh i mean my stomach even turns when i look at our stuff like man so it is it is a bummer but you know what no i haven't even looked at mine oh that's that's that's good i guess i guess you know maybe i just, maybe I just hadn't thought about it. I don't even know what it did.

Yeah. I know what the stock market did, so I have an idea what it did. Yeah, for sure. For sure. I know what it was a month or two ago. It's depressing, so you shouldn't. Well, I mean, it doesn't serve any purpose because it's not going to change your outcome. You know, one of the things we teach in leadership when we're teaching folks in running a business

is if you know what the principles are by which you run your business, you know what your values are. I'm not going to cash it out. That's one of my principles, right? So once you know what your principles are, your decisions are, a lot of them are already made for you. It's just the pain of executing the decision. I know I'm not going to tolerate that kind of behavior. I've got to let that person go because they behave that way. But the decision was already made.

I've just got to do the hard thing then. The decision was already made. I'm not cashing it out. Truthfully, I'm not bragging. I just ain't thought about it. Yeah, sure. I'm not looking. I'm not scared to look.

It just doesn't matter. It's not going to affect the decision. Rachel Cruz joins me this hour. This is the Dave Ramsey Show. Catherine is in South Carolina. Hey, Catherine, welcome to The Dave Ramsey Show. How can Rachel and me help? Hi, thank you for having me on. So my question is, what is it as an airline pilot?

And I work in the commercial real estate industry. And we're 31. We have two young kids. And for about a year, we've been saving a lot of cash and living about $5,000 under our means. And our mortgage is about 10% of our income in order to buy a piece of land and build our dream home. And we're under contract to do so in a couple of months. But now with this unexpected crisis, we're really scared to spend so much cash right now. Given our industries, you know, if this crisis goes on for more than a year or the, you know, impact to our industries goes on for quite some time, then we're just concerned that we don't have all that cash.

How much cash do you have? About $35,000. How much is the land? And it's $150,000. I wouldn't have been buying it anyway. Okay. You know that. We were thinking that it would be okay because our mortgage is so low and the land payment would be $1,000 a month.

So that mortgage together would be under, you know, 25%. But we're new to the baby steps. We only honestly started paying attention to this maybe a couple of months ago. And we realized there were a lot of things perhaps we should have you know been more disciplined on but I guess we were just thinking because we're living so far under our means that it would be okay and now we're just you know how much debt do you have other than your home um I put my husband through school so we don't have any student loans we have like a four thousand dollar um car know, total owed on one car. We drive old cars, and that's like a $300 a month car payment.

That's it. Okay. It sounds like you guys are pretty calm and pretty wise people in general, and you've just kind of started getting plugged into our stuff. What happens with our stuff is it gives you the ability to fine-tune what is your positive nature already. Your nature is you're wise, you're frugal, you take your time, you're deliberate. And then what we give you is a lot of proven steps and processes to kind of clean up and give precise step, precise movement to the principles you are already kind of living.

Does that make sense? It does. So in your case. In hindsight, we wish we had been more disciplined to do the baby steps sooner. Well, no, just take the baby steps and do them right now. I mean, baby step one is $1,000. You've got that. Two is debt-free, but the house.

Pay the car off tonight. Okay. Okay. Then baby step three is three to six months of expenses. You've got that. Two is debt-free, but the house. Pay the car off tonight. Okay. Okay. Then baby step three is three to six months of expenses. You have money set aside other than this $35,000? We contribute 14% each to our 401k. But I'm talking about for an emergency fund.

No. Okay. Yeah, this land deal is toast. Okay. Yeah, because what your nature was telling you was you were going to be sitting there with no cash and really unstable jobs. Even though you are frugal people, you can't frugal your way out of that. Right. And so your nature was kind of telling you that you, you know,

I used to try to do it the other way. I'm the opposite of you in that I've always been good at making money. And I thought I could out earn my stupidity. And you guys are kind of try to out frugal your stupidity. You know what I'm saying? And so that's the answer to everything, you know, and it's not, you've got to have a game plan. So your 35,,000 needs to be $4,000 to the car and then an emergency fund of three to six months of expenses, which right now could be $31,000. I'm fine with that. And you just park it, and you're going to lose your deposit on the land deal

unless they want to allow you to renegotiate to purchase it later. But right now you should not close on that. Mm-hmm. Right. And I'll say this, Catherine. That's kind of what our gut was telling us, but I think we on that. Mm-hmm. Right. And I'll say this, Catherine. That's kind of what our gut was telling us, but I think we needed to push over the edge. Yeah. And I'm in your shoes right now.

I'm like, I'm the same age. I've got three little kids. And so I'll just tell you this just as some encouragement. I'm like, we've been taking calls on this show of people in their 60s and 70s, you know, just starting this stuff and not having even money for retirement, all that. I mean, you guys are just 31. And that's the most amazing thing. I mean, even if you build your dream home and you press pause, not only could you find a better piece of land, but you're able to maybe even do something better, something bigger, something more what you want.

All of those things, just time is in your favor. And so that dream of purchasing land and building a home, that doesn't mean that that can never happen. It just will be delayed. But sometimes that delay always comes in your benefit. Yeah. If you do it, if you do it wisely, you need an emergency fund in place and you need to be that free before you start talking about moving on to another house deal. And this is another house deal. You know, probably going to sell your home, live in an apartment, buy the land, and if you're going to put the land on debt, that's the only way to do it, make it part of a construction loan, go ahead and start construction right then.

But that's going to be next fall at the earliest. And that's what I would look at doing. And if they want to hold this piece of land until things calm down, it's not like they probably got a bunch of buyers lined up right now anyway. And the peace of mind of having that cash in the bank, because we don't have an emergency fund. And it's like what we've kind of been talking about. And then all of this hits what's been going on with coronavirus and unstable jobs, all of it. You're going to breathe a sigh of relief if this thing even continues for the next couple of weeks or even months,

hopefully not. But man, you're going to be so thankful that you have money in the bank versus a piece of land at that point. And here's how you can tell if this is wise, Catherine. Okay. You had this angst between wanting to close on the deal and knowing that it felt unwise. You had this pulling at you. And when I definitively said, no, you can't do it. You nodded. I didn't see you, but you did. You nodded. You smiled a little bit and a sense of peace washed over you. You can tell you're making a good decision if there's peace in your spirit when you're ongoing. When you've got angst in your spirit and you're going forward, you know you're heading the wrong way, whatever it is. Now, some things are higher pressure

some things are more exciting and that's not to be confused with peace you can be excited and still have peace but not angst yeah and so that your your spirit was disturbed and you can tell that you kind of smiled you kind of nod a little bit and you just you feel relief when i said no as if i get to make the decision i don't i don't get to make the decision you just called for an opinion and it's worth what you paid for it but isn't it interesting how you felt and that's confirming to you that this is the right thing and sometimes sometimes what we're doing here on this show rachel you and i and everybody else that sits in these chairs is we're just telling people what they already knew, but there's a sense of, yeah, that's right. I knew that.

And that just tells you, yep. You know, all it was was the, you know, the 38 year old or 40 year old version of you, um, is making a better decision than the five-year-old version of you. That's a serial kid on a cereal aisle with a red face and mad because mommy won't buy the cereal. You know, we've all got that kid inside of us. I want it, and I want it, and I deserve it, and you say stupid stuff like entitlement phrases, and I want it, I deserve it, I work so hard, all this stupid stuff we say to ourselves when we're getting ready to make a bonehead decision, it always comes up. But there's no peace in that. That's right. The peace that passes understanding.

You've got to have this sense of, and if you can't find peace in your decision-making, you are making a bad call. And that's a rule of thumb we use around here on leadership stuff inside Ramsey. It's a rule of thumb we used in our home growing up. And I'm not going to be panicked. And I'm not going to be driven by fear. I'm not going to be driven by angst. I have been afraid.

I have been concerned. I have been worried many times in my career. But I'm not going to make decisions based on that it'll kill you won't it yeah absolutely I mean it it is an amazing thing I feel like even when it comes to personal finance and all the craziness happening right now just giving people permission more than ever just to go back to common sense right like what does common sense tell you which is usually your gut like you're saying most people know the answer. But sometimes you just need that permission, and that's what we're really good at. Giving it to you.

Giving you permission to say, no, I'm not doing that right now. I'm not living that way. Because the dream is still alive. Still alive. She can still build that house later in life. Oh, yeah. And like you said, it'll turn out better. And you'll have much more joy from it when you do it right.

Rachel Cruz tonight. Don't miss it. The Message of Hope series continues with the Ramsey personalities. Be sure and tune in at rachelcruz.com and at Facebook and at YouTube. You can catch her there. This is the Dave Ramsey Show. You can listen to Dave anywhere with the Dave Ramsey Show app on your smartphone. Catch the full show, browse by topic, or send clips to your friends.

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