Over $50,000 In Debt And Losing My Job!


7th February 2024 | 00:05:19

Over $50,000 In Debt And Losing My Job!

Over $50,000 In Debt And Losing My Job!

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TLDR: Todd, a 40-year-old California resident, called the Dave Ramsey Show to discuss his financial situation. He works for a government entity and is likely to be medically retired within the next five years. He has $18,000 in debt, a $42,000 car loan, $30,000 in retirement savings, and a VA disability pension. His annual income is $93,000 from employment and $40,000 from the VA. Dave advises Todd to focus on developing a career path for his encore career and to pay off his debts, especially the car loan. He recommends reading Ken Coleman's book, "The Proximity Principle," for guidance on choosing a career he loves.
In the vibrant state of California, Todd found himself in a conundrum, seeking guidance from the renowned Dave Ramsey Show. With a potential medically induced retirement looming on the horizon, Todd, at the tender age of 40, sought to secure his and his family's future amidst uncertainties.
"Dave, I've stumbled upon your wisdom in the past month, and I'm trying to get my financial ducks in a row," Todd explained. "I work for a government entity here in California, and there's a good chance I could be medically retired sometime between now and the next five years. I'm only 40 years old, and I need to figure out a plan for myself, my wife, and our three kids."
Todd's wife, listening intently, scribbled notes as he laid out their financial landscape. "I'm expecting a workers' comp settlement check soon, and I want to use that to pay off the roughly $18,000 in debt we have, excluding our vehicle payment. We still owe $42,000 on that," he revealed.
Delving deeper into their finances, Todd mentioned his $30,000 in a 457 plan, a retirement account through the state retirement system, and a VA disability pension.
"What's your household income in a year?" Dave inquired.
"Currently, it's about $93,000 from employment, with an additional $40,000 or so from the VA," Todd replied.
"That's a hefty car payment you have there," Dave observed. "It's a bit pricey, but we need the space for our three kids," Todd explained.
Dave nodded in understanding. "I get that, but you could easily get three kids into a $15,000 car. I've done it myself."
Todd contemplated this suggestion. "I never thought about it that way. I'll definitely consider downsizing the car," he agreed.
"After you receive the initial $26,000 settlement amount, you'll get about $1,100 per month for approximately 24 months," Dave calculated.
"I'm not out of work yet, but I could be forced into medical retirement anytime between now and the next five years," Todd clarified. "It's because of injuries sustained from work."
"I understand, but you're only 40 years old," Dave emphasized. "What are you going to do for the rest of your life? You need to start thinking about a career path right now."
Todd's brow furrowed in contemplation. "I have no clue. One thing I do know is that if it happens, we need to move out of California. We can't afford to live here on a disability income alone."
"It's not a matter of if but when," Dave asserted. "You need to prepare for this transition, or you'll find yourself in a difficult situation."
Todd absorbed Dave's words, recognizing the urgency of the situation. "You're right. I need to start planning for my next chapter," he admitted.
"Take some time with your wife to think about what you're both good at, what makes you happy, and how you can turn that into a lucrative career," Dave advised. "Maybe you need to take some classes or get a certification. Whatever it takes, start working towards that goal."
Todd nodded resolutely. "I'll do that. I need to secure our future," he affirmed.
"In the meantime, pay off all your debt, except for the $26,000, with the settlement check," Dave instructed. "Then, develop a long-term plan for your transition. I'm sending you a copy of Ken Coleman's book, 'The Proximity Principle.' It will help you get into a career you love."
With newfound determination, Todd thanked Dave for his guidance and hung up the phone. He knew he had a lot of work to do, but he was ready to face the challenge head-on, securing a brighter future for himself and his family.
  • What is Todd's current financial situation?
    • He has $18,000 in debt (excluding vehicle payment).
    • He has a $42,000 vehicle.
    • He has $30,000 in a 457 plan.
    • He has a retirement through the State Retirement System.
    • He receives a VA disability pension.
    • His household income is $93,000 from employment and $40 from the VA.
  • What is Todd's concern?
    • He may be forced to retire due to medical reasons in the next five years.
    • He is unsure of what career path to pursue after retirement.
    • He wants to ensure financial stability for his family during this transition.
  • What advice does Dave Ramsey give to Todd?
    • Focus on developing a career path for his encore career.
    • Consider taking classes or certifications to enhance his skills.
    • Be proactive in planning for the transition to retirement, rather than waiting for it to happen.
    • Pay off his debts, excluding the vehicle payment, with the settlement check.
    • Sell the current vehicle and purchase a more affordable one.
    • Create a long-term financial plan.
  • Why does Dave Ramsey recommend these steps?
    • Developing a career path will ensure Todd has a source of income after retirement.
    • Paying off debts and reducing expenses will provide financial stability.
    • Selling the expensive vehicle will free up more money for other priorities.
    • Creating a long-term financial plan will help Todd navigate the transition to retirement and achieve his financial goals.
  • What additional resources does Dave Ramsey recommend to Todd?
    • Ken Coleman's book "The Proximity Principle" to help Todd identify a career he loves.

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7th February 2024

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