How Should I Use My Tax Refund? (Hour 2)
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How should I use my tax refund effectively?
Live from the headquarters of Ramsey Solutions, broadcasting from the pods, moving and storage studio, this is The Ramsey Show. It's where we help you win in your life, specifically your money, your work, and your relationships. I'm Ken Coleman. Christina Ellis is my colleague and joins me this hour. The phone number is free to jump in on the conversation because it is about you. 888-825-5225. That's 888-825-5225. So Christina and I are here together, and while we take those general questions, we also love to team up in our specific areas of expertise. Christina is a true, unbelievably knowledgeable expert on how to go to college, without going into debt. She's a best-selling author and working on some really fun stuff that we can't wait to talk about in the days ahead.
And then I'm helping people specifically win in their work life. So if you feel stuck or you feel scared, you feel doubtful, you're dealing with some toxicity, horrible leadership, and you're just looking for some help and some ways out, we're taking those specific calls today as well. Let's get started with Alan in Chattanooga, Tennessee. Alan, how can we help?
Should I pay off my house before the baby arrives?
Yes.
How are you doing? We're living the dream. What are you doing?
I'm about to have a baby in about six months.
All right. That's exciting. Yeah.
Kangaroo hats. Yeah. That's right. It's our fourth one, so we're getting busy.
Oh, fourth. Yeah. You're exhausted, aren't you, Alan?
What are the risks of living in my car to save money?
You sound exhausted.
A little bit, but I also look nice, too, so it kind of makes it all a little bit worse.
Say that again. You broke up.
I work nights as well, so it kind of makes the exhaustion even worse.
Oh, bless your heart. Okay, I get it. All right, well, how can we help today?
Well, I'm wondering, with the bid becoming about six months, I have the cash to pay off my home, and it would leave me with about $15,000 in cash as well for backup. And I was just wondering if it would be wiser to go ahead and pay it off now, or to wait until after the baby is born in six months.
So that $15,000, is that your fully funded emergency fund, or is that over and above that?
That's emergency fund.
Okay. Is that fully funded?
What are the 10 worst-paying college degrees?
Would that be about three months of your expenses or six months? Where does that fall?
If I lost my job, I can cut expenses back to about $1,500 a month. And so it could last me six months if the house is paid off.
Okay. And if it's not paid off, is that about, yeah, about three months?
About three months, maybe.
Okay. And how much do you have left on the house?
I have $54,500.
Man, I'm just excited for you. The fact that this is even a question that we're not in stork mode and talking about like, oh, man, what do we do? This is great. I mean, it's one of those situations where there's not really necessarily like a wrong answer. But we do typically recommend whenever there's a baby coming to kind of hold off and hold on to cash because there's a lot of things that can happen.
How can I transition to a new career?
Unexpected expenses. I mean, we're talking about quite a bit of money and paying off a house. I think we just kind of have to frame it in the sense of if I were in your shoes. If I were in your shoes, I would probably hold off until the baby was born or at least just do a portion, especially with the 15K left. That would make me a little bit nervous. I would want to have a really flush emergency fund. I'm also curious. So with the expenses, how much are you anticipating the birth is going to cost and any expenses around baby?
I estimate about $4,000.
And how much are you making right now?
I make $49 a year.
$49 a year. And you said you have four babies at home? Did I hear that correctly? This will be number four.
What financial steps should I take with a newborn?
This will be number four. And is your wife, does she stay home? Or what's kind of the rest of your family situation?
Yeah, I'm always going to stay at home. And that's part of how we kept our expenses down.
Yeah, I'm excited. How did you save up the $54,000? Has it just been diligently saving it up? Or did you have the vision to pay off the house? Why did you save it up and wait till this point versus kind of paying it off incrementally?
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Chapters
8 chapters
1
How should I use my tax refund effectively?
0:30–1:46
2
Should I pay off my house before the baby arrives?
1:46–2:06
3
What are the risks of living in my car to save money?
2:06–2:57
4
What are the 10 worst-paying college degrees?
2:57–3:49
5
How can I transition to a new career?
3:49–4:36
6
What financial steps should I take with a newborn?
4:36–5:18
7
How can I balance saving and spending during a financial crunch?
5:18–5:56
8
What are the benefits of a fully funded emergency fund?
5:56–38:30