How Do We Save and Pay Off Debt at the Same Time?

Summary

James, a new father-to-be and children's pastor in San Diego, calls into the Dave Ramsey Show for financial advice. With a baby due in March and an $18,000 car loan, he's seeking guidance on financial priorities. The host advises him to pause his debt repayment (Baby Step 2) and focus on building savings due to the upcoming baby. James also discusses an inheritance and his mother's financial support for a house down payment. The conversation emphasizes the importance of financial preparedness during life's significant events, offering a tailored approach to the Baby Steps financial plan.

Takeaways

• 👋 James has recently joined the Dave Ramsey Show community and is seeking financial advice.
• 🏡 James moved from New York City to California during the pandemic and started a new job as a children's pastor.
• 👶 James and his wife are expecting a baby in March, which is a significant life event affecting their financial planning.
• 💰 James is currently on 'Baby Step Two' of the Ramsey plan, having a small amount of savings but also an $18,000 car loan.
• 🚗 The car loan is for a second-hand car, not new, but still incurred a significant debt.
• 📈 The advice given is to pause 'Baby Step Two' due to the upcoming baby and focus on building savings instead of paying extra on the debt.
• 👶 The emphasis is on accumulating savings to cover potential costs associated with the baby's arrival and to provide a financial cushion.
• 💳 James is advised to avoid using credit cards and to switch to a debit card system to control spending.
• 💼 James has an annual household income of $70,000, which will be a factor in determining how much he can save.
• 💵 James has received an inheritance of $19,000 and additional funds from his mother for a down payment on a house.
• 🏠 The inheritance money should be kept separate and used according to the stipulations provided by James's mother.
• 📊 By focusing on budgeting and saving, James is projected to have between $25,000 to $30,000 saved by the time the baby is born.
• 🚫 The advice is to stay current on the car loan but not to pay extra until after the baby is born and the family is stable.
• 🔄 After the baby's arrival and ensuring the safety of mother and child, James can then apply the extra savings towards paying off the car loan.

Q & A

What is the main topic of the conversation in the script?

The main topic of the conversation is financial planning and prioritization, specifically for James, who is expecting a baby and has recently moved to California.

What advice is given to James regarding his financial situation and the upcoming baby?

James is advised to pause his debt repayment (Baby Step 2) and focus on building up savings due to the baby's arrival. He is also encouraged to stay current on all debts but not to pay extra until the baby is born and the mother is safe.

What is the current status of James' financial steps according to the script?

James is on Baby Step 2 of the financial plan, having a small amount of savings, but also has an $18,000 car loan.