- Hey you guys, welcome to The Rachel Cruze Show.
All right, back in the day, many moons ago,
we did a segment called Ask Rachel.
(rewind)
I'm taking a question from one of you.
That's right, it's Ask Rachel video blog.
It's Ask Rachel day!
It's an Ask Rachel video blog.
An Ask Rachel a question is coming your way.
I would answer all of your questions from social.
You would usually use the hashtag #askrachel back in the day
and I'd go search through them,
find some questions, and answer them.
And so we decided to bring it back
to say hey, let's answer some of your questions
here on the show because I think it's so important.
You guys probably do have a lot of questions
when it comes to your money and we can kind of dig in
to your personal life, what's going on with you,
and hopefully help all of you watching
because usually, most of these questions
relate to most people.
So let's go ahead and dive in.
The first question is from Jaimi.
And she asks, "We just got $960 per person in Alaska
for a Permanent Fund dividend.
Any advice on how to spend that.
Should certain percentage go to debt, savings,
blow money, charity?"
Well number one, when I wanted these questions,
I was like let's get some broad questions
that everyone can relate to.
So the question about $960 per person in Alaska
for the Permanent Fund dividend,
I was like yeah, we don't get that in Tennessee, no no.
So I had to Google what that is.
So apparently if you are an Alaskan resident
for a full calendar year, you get $960 per person,
a check in the mail from the government
because they let companies come and drill
and get oil on people's land,
so they just give the money back to them
part of what they earned.
Who knew?
I had no clue.
So I thought well, that's a little specific
to Jaimi and Alaska that not everyone can relate to.
But the answer to her question is actually the answer
that I give to a lot of people when they ask
okay, what do I do with extra money?
Hey, I got a big commission check
or I got a yearly bonus, or wow, I just found some money
and I don't know what to do with it, right?
Like people get extra money places
and you're like okay, what do I do with that extra money?
The answer's very simple.
Start with the Baby Steps.
So she asked okay, do I just kinda like spread it out?
Do we like have fun with some, do we save some,
do we pay off debt with some?
No no no no, go straight to your Baby Steps.
So if you've not started, let this be,
well that's pretty good for Jaimi.
$960, let this be for Baby Step 1.
If you don't have $1,000 saved,
go and save that $1,000.
Use any extra money you have coming in, start there.
Then once you have that, then move on to Baby Step 2,
which is paying off all of your debt.
And so start paying it off.
Throw any extra money you get.
Again, especially around Christmastime,
people get a Christmas bonus, or again,
if you got a big commission check randomly,
like whatever the case is when you get a big check in
and you have debt, throw it toward the debt.
Baby Step 3, three to six months of expenses.
And then after that, I would say you can kind of
like let your foot off the gas a little.
And if you get some extra money, yeah,
take some of it, go have fun with some of it.
You can save some too if you want,
throw it toward retirement, throw it toward the house,
or you can spend it.
At that point, it's really kind of up to your discretion
when you're on Baby Steps 4-7.
But especially all of you on Baby Steps 1-3,
any extra money that you have,
even if it's from the Permanent Fund dividend in Alaska,
throw it toward the Baby Steps
and to make that progress quickly.
So Jaimi, I hope that answers your question
and all of you out there that get extra money.
All right, the next question is from Lisa
and she asks, "What are the signs that your job
is or is not stable so you can determine
if saving, going into storm mode, or paying down
or off debt is the wiser choice?
For example, we thought my position/job was stable
since they hadn't laid anyone off
in the previous five years, and then within six months
of this year, there's been two layoffs
and they let people go who had been there for 15 years
of service with the company."
Okay, well my first thing is okay,
if they're doing layoffs, like if you see
people are getting laid off, thank you Coronavirus 2020,
this is probably why it's happened.
It didn't happen for five years at her company.
It's happened in the last six months
I'm going to guess due to COVID-19.
So if that's the case, if people are getting laid off
around you, then yeah, I would say hey, hm,
let me just think about my department,
my position specifically.
So say you're in accounting, probably a good time
that like oh yeah, you're probably gonna stick around.
Like that's probably an essential
type of position within your business.
If you are doing sales and what you are selling
is not being sold anymore, then yeah,
you're probably like okay, yep, this job's probably
not gonna last much longer.
So again, I would look company wide and say okay,
are there layoffs going on?
You may be in a position where no,
there are no layoffs in the entire company happening.
Then you're probably good and I would continue
to pay off your debt.
If layoffs start occurring or you start hearing talk
from leadership that layoffs are going to occur,
again, I would say okay, let me think
about my position in the company and where I'm at.
And then talk to people, communicate.
Some businesses are better at this than others,
I would say, but if you can go to your leader
and just say, hey listen, here's the deal.
Like I need to know.
Like what do you think is gonna be happening?
And if there is any hesitation, if there's like a hey yeah,
if this keeps going the way it's going,
there's a good chance in 90 days
we're probably gonna do some layoffs.
If there's any of that language,
I would for sure pause paying off debt
and start stockpiling money.
But again, if you are in a business
that they're not doing layoffs or if you're in a position
within a company that's going to survive COVID-19
and your position will probably not be laid off,
again, start paying off debt.
So it is a little vague because it is going to be
per person, per position, per industry, per business.
I mean there's so many factors that go in.
But communicate and ask.
I think that that's probably the best way
to get your answer.
And I would also say you could be on the safe side.
Like if there are layoffs going on
and you think okay, I think I'm fine but I'm not sure,
well just pause for 30 days.
Let that snowball pile up some money.
And if you're still feeling good,
then take some of that and start paying off debt.
Like this is a very strange time we're all living in.
So take it with stride and I don't think
that there's a wrong answer here necessarily
unless everyone around you's getting laid off
and you're like, oh no, I'm fine, keep paying off debt.
I'd probably be like I'd pause and save up cash.
Or if you're a FedEx driver and you're like uh,
I'm gonna just pause everything because I'm freaked out.
No no no no, you're probably fine.
Keep paying off debt.
So again, communicate as much as possible with your employer
and those you work with to kind of figure out
what's going on in the situation.
All right, number three, Rebecca.
She left her question through voicemail.
And she said that her husband and her
have been doing Dave-ish for several years
and doing the Baby Steps out of order.
They have their $1,000 emergency fund
and are on Baby Step 2, but they are also
contributing to college.
And then she asks for affirmation
that she should be working the Baby Steps in that order.
Okay, Rebecca, I would say to you
that you're probably rather common.
I've heard a lot of people talk about it.
It's kind of been a joke with us of like yeah,
people are Ramsey-ish.
Like oh yeah, I'm kinda doing it
but I'm also kinda doing this on the side over here.
And listen, here's the deal.
It's a proven plan, okay?
Like it's helped millions of people.
You really can't argue with it.
You may not like it, you may not agree with it,
but you can't argue that it's not, it doesn't work.
Like it works, okay?
So working the plan is going to help you.
That's the bottom line.
So it depends on the intensity
that you want to work the plan.
If you're kind of like eh, I'm okay just kinda like
sort of being successful a little bit at a time,
do your thing, do how the spirit leads.
But if you're like oh no, like I want to get in control
of my money, I want to build wealth,
I want to get out of debt,
like I want to do some stuff, then do the plan.
It's all you have to do, okay?
And again, the plan is the Baby Steps.
So get that $1,000, pay off debt,
get you a fully funded emergency fund,
and then invest 15% of your income into retirement,
pay for kids' college, pay off the house early.
Then Baby Step 7, the last one, is build wealth
and give a bunch of it away.
And that's it, and there's a reason for each step, okay?
It's not like when Dad created it 20 years ago,
he's like okay, I'm gonna just pull out a number.
Whoa, $1,000 emergency fund, we'll put that at one.
What's next?
Pay off debt, two.
No, okay it's methodical, it's been thought through,
it's been proven, because especially on
Baby Steps 1-3 specifically,
the more focused you are and the more intensely
focused you are, the faster you're gonna make that progress.
So if you're trying to do 18 different things,
if you're trying to like pay off a credit card debt here,
you're gonna put some money in kids' college,
some in retirement, too, put a little
in savings in the bank, you're kind of all over the place.
You're not gonna see the progress that you want to see.
But when you focus and you actually pay attention
to one thing at a time, that's where progress is made.
And that's where you see oh wow,
okay, this is actually working.
I see this a lot honestly on Baby Step 2
with gazelle intensity when we talk about paying off debt.
Some people are like yeah, I'll kinda like take a vacation
here or there, we'll still like do some things.
But those people that get out of debt
in a crazy amount of time with a crazy debt level
with not even a big income,
everyone's like how did they do it?
Because they sacrificed.
The deeper you sacrifice,
the faster you're gonna get those results.
And the same is the Ramsey-ish thing.
If you just do the steps, you guys,
I promise it's going to work.
And just give it a few years and do it.
And if you absolutely hate it,
if you get to the end and you're like man,
we're out of debt, we have a fully funded emergency fund,
putting some money into retirement and kids' college,
I hate this whole thing, you can go back
to where you were a few years ago.
Like no one's stopping you, you can still do that.
So I guarantee the plan works and I would,
I would go right down Baby Steps 1-7
because they're there for a reason.
But thank you so much, Rebecca, for asking your question
because I think a lot of people do have that question.
All right, this was such a fun video.
I love this, I love being able to answer your questions.
So you can ask me any question you want.
And we're looking all the time on Twitter,
on Instagram, on Facebook, my Facebook community,
which if you haven't joined yet, make sure you do that
because we're in there a lot looking
at a lot of your questions.
Anywhere that you want to post a question, you can.
And we have the little voicemail
that Rebecca called in too.
So the voicemail number, you ready?
Pen and papers out.
844.944.1075.
So you can call, leave a message.
You can hear your beautiful voice here on the video
and I'll answer your question
via the voicemail, as well.
So again, time, this is a great time
just to dig into where you guys are,
answer your questions, and help all of you watching.
So remember to take control of your money
and create a life you love.
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