- All right, some of my favorite parts of this show
is getting to answer your questions.
So my team went through all the social channels
to pull out some great questions that you guys have.
So we're gonna start with Kayla from Facebook.
She says, "Hi, Rachel,
"we bought a home pre-Dave
"with a first-time home buyer program.
"We didn't put a down payment down when we closed
"and instead it's a second mortgage
"and isn't due until we refinance,
"sell the house, or pay off the mortgage in full.
"Second mortgage is $11,180.
"I've contacted the mortgage company
"and they said that we can't make payments on it
"until after we've done one of the options above.
"I feel like I'm cheating on Baby Step 2.
"What do you advise?"
Well, what I would say is this all has to do
with your home, okay?
So I would put all of this in Baby Step 6,
so you're not cheating Baby Step 2 at all.
Baby Step 2 is your consumer debts.
This is credit cards, student loans,
personal loans, car loans, anything like that,
that goes in Baby Step 2.
Anything that has to do with the house,
like a mortgage or mortgage specifically,
that is gonna be in Baby Step 6.
So continue on, once you get to Baby Step 3,
if you guys wanna refinance then whatever you wanna do,
it doesn't matter.
You can make those options.
But when you get to Baby Step 6,
that's when you're going to start working on the mortgage,
and that includes your second mortgage.
And you guys, that's one reason we always say
to go ahead and put 10 to 20% down for your down payment
when you're buying a home,
and you're gonna do this in Baby Step 3b.
So once you're completely out of debt,
you have a fully funded emergency fund,
then save up for that down payment.
Having a down payment is going to simplify this process
and get you ahead
and to show you what kind of house you can afford.
Programs like this, the first-time home buyer program,
it lets people buy homes who don't have any money.
And so, that's not to shame Kayla, that's not to shame you,
but it's to say, "Hey, you have to do this stuff
"in this order."
This is why we talked about this because when you're broke
and you buy a home, it stresses you out
because there's expenses that happen. All of this stuff.
There's such responsibility to homeownership.
So you wanna be in a good financial position to do it.
So to Kayla, to answer your question,
it's in Baby Step 6 'cause it's a mortgage,
but if you guys are going to sell in the future,
make sure that you are doing it in the process
because the process works.
All right, next up is Meghan from my Facebook group.
She said, "My husband and I are due with our third child
"at the end of November."
Congratulations, Meghan.
"We are still in Baby Step 2,
"but how do we actually stop focusing on paying debt
"and putting it toward savings for the baby?
"We just started the plan last year."
Well, that is what we recommend.
When you have a big life change coming up,
if you're about to lose a job,
if you are pregnant with a baby, all that kind of stuff,
you pause Baby Step 2 and pile up cash.
And then once you're home from the hospital,
you're good, baby's good, everything's fine,
take all that money you were saving
and throw it at the debt.
So what you're gonna do
is you're just gonna pay minimum payments,
stay current on your debt,
but anything you would put toward that debt snowball,
I still want you to be gazelle intense,
but that money isn't going down toward your debts,
it's going to be put in a savings account
to make sure everything is okay.
Because again, that big life event
you want some cash handy, I promise you.
So listen, you've got a husband
and three babies who are going to depend on you
to provide so much for your family.
So you and your husband both need life insurance.
I always recommend Zander Insurance,
they save you so much time
'cause they shop all the rates for you,
and they save you money because they present with you
the best value for your unique situation.
So make sure you get that because you're gonna wanna get
at least 10 to 12 times your annual income and coverage.
And again, stay at home moms, you need it too
because if something were to happen to you,
you have to replace your value with money
'cause there's gonna be things like childcare, home upkeep,
so much there that your family's gonna need.
So life insurance, term life insurance is so affordable,
especially for the amount of peace that it gives you.
So make sure to go to zander.com.
All right, the last question is from Danielle.
And she emailed this in last week.
And she said, "Last week,
"my husband tragically committed suicide.
"My kids 12 and 10 and I'm 39
"and our family and friends are in complete shock,
"as this was so unlike his personality.
"With that said, I'm absolutely terrified
"for our future, especially financially.
"My husband had life insurance equivalent to six years
"and a pension, but we also have $25,000
"in credit card debt
"plus I'll have to start paying back my $30,000
"in student loans next spring or summer when I graduate
"from my Master's in special education.
"We still owe most of our house that's $345,000
"and it needs a new roof.
"To complicate matters,
"we have a vacation home in another state
"that we bought a little over a year ago
"and never even got to enjoy,
"and are evicting the tenants and are selling it.
"Please help."
Oh man, Danielle. That's a lot.
That's a lot.
And so to start off, I would say,
first and foremost that you have to take time to grieve.
When anything like this happens in life, unexpected death,
a tragedy, there's something there,
don't make any big financial decisions in the first year.
So pause, pause, pause, pause, just sit.
Nothing, nothing terrible is going to happen
in a year financially.
You need to breathe and you need to grieve.
And you need to make sure you have a good counselor,
a pastor, friends and family around you
because first and foremost,
taking care of yourself in this
and these two babies that you have,
that is most important.
So the finances, that's second.
Right now you need to just breathe.
And sometimes when you're in this foggy state of grief,
you can make really bad financial decisions.
And so I would say
people are gonna be coming out of the woodworks
trying to help you and all that, which is wonderful.
Just take a minute, just breathe.
Again, give it 12 months,
give it half a year if you need to, put that time
not to do anything major.
And then the first step I would do is you guys
have some debt coming in and your home,
so I would not sell that vacation home right now.
Again, I think you could make a really bad decision
in that process because you're in such shock right now.
So sell the home,
I think that's a great plan. I wouldn't do right now.
I'd give yourself six to 12 months.
Sell that home, and then use some of that money
to start paying off that credit card debt.
And then what you're gonna have to realize
is that the rest of that money that is left
can either go continue down the Baby Steps
or you need to see if you can stretch that money
as far as possible.
So then I would get
with one of our SmartVestor Pros
in your area and sit down and show them what all you have,
and say, "Okay, here's the amount of money I have,
"What should I do with it?"
And they're gonna be able to walk you through smartly
where to invest it so that it can stretch out
as long as possible.
But working on the Baby Steps is what's gonna be key.
So making sure you have that $1,000 emergency fund
and then you can start using some of that money
to start paying off that debt,
the credit card debt and the student loans.
And then don't worry about the mortgage now.
Build up an emergency fund,
make sure that there's enough money there
for that emergency fund,
and then start looking at retirement
and just go right down the steps.
That's why the Baby Steps is so helpful
'cause it's so clear, it's such a guided path
that shows you exactly what to do.
But having someone like a SmartVestor Pro,
someone that is in this world financially
with the investment specifically, in your corner
is gonna be extremely helpful.
And you can even check out
one of our Ramsey Preferred Coaches as well
and they can walk with you.
But find people in your corner in this space.
Who knows what your what your sister in law's opinion
is on your money or whoever.
Make sure it's someone that you trust,
and that you understand where your money is going,
and what it's going to.
And again, making big decisions in the first year,
it's gonna be really hard
'cause that grief is so overwhelming.
So get a clear mind
and just walk through the Baby Steps.
And again, that's the plan
that's gonna take you to freedom.
And so again, Danielle,
I can't even imagine and I'm so sorry.
But again, taking care of yourself right now,
I think is what is most important.
All right, you guys, I know it's a lot.
It's a lot of life that we see, right?
And money is such a woven thread
through so many questions
but really what we talked about here is life
and how to use money as a tool.
So I don't want it to be a place that stresses you out
and freaks you out,
but it's something that you can get in control of
and tell it what to do.
So if you have a question for me,
make sure to send all your questions
to askrachel@rachelcruze.com
or you can post in my Facebook community,
on Instagram or YouTube.
We're always checking the social media outlets
to make sure we can answer your question.
So I always love hearing from you guys.
And always remember to take control of your money
and create a life you love.