- This episode is all about
taking the stress out of money once and for all. And it all comes down to one thing: a fully funded emergency fund. (bright upbeat music) Hey, welcome to The Rachel Cruze Show. Today, we are going to talk about the importance of having
an emergency fund. Even saying those two words, some of you are like, "Oh, wow. I really
wish I had one of those." Some of you are saying, "Oh, I had it, and it's gone now," "Thank you, COVID- 19." Some of you say, "Hey, I have
money in the bank. I'm good." But no matter what boat you're
in, this episode is for you. So, get ready. My dad, Dave Ramsey, is back on the show to talk
about what a game changer it is to have an emergency fund and how to rebuild it if you use it. I've got a couple on who used their emergency fund
to survive the COVID pandemic. Okay, one in four households,
in the middle class said that they couldn't pay all of their bills, thanks to COVID- 19, which means a lot of people out there did not have an emergency fund. But listen, even in a time of job loss, a health crisis and uncertainty, you can have peace about your money. And an emergency fund
gives you that peace of mind. An emergency fund is just
money you've set aside for unexpected things in life. So, it's really a buffer
between you and life. That's always how I look at it. It's like the safety net. So, you're living life,
something bad happens, and it just kinda keeps you from completely hitting the ground. And what it does, also, is it turns this crisis of panic
into just an inconvenience. So, I have a voicemail. I know I've mentioned this
a couple times in the show that people can call and ask questions. So, I actually got a call
from Christina in California. And her story, it was pretty heavy. She has a lot of life that's happened to her. So her and her husband
who, he's in the military. By the way, thank you so
much for your service and everything that you
do for this country. It's amazing. But they moved from
Illinois to California. And then they got in a
really bad car wreck. Thankfully everyone's okay. But a lot of attorney fees,
they were sued a year long, just craziness with that. And then, on top of that, now her husband is being
deployed for nine months. So, they had an emergency fund in place, and now they've gone through it. And they're at this point
of kind of a crisis now, because they don't have savings. It seems like they're
living above their means. And now her husband is being deployed. So, what kind of direction
does she need to go? The way I always answer
these kind of calls, Christina, is that you have to understand that money flows two ways.
Money flows in, and money flows out. So, if the money that is flowing out is greater than the money coming in, more than likely you
have an income problem. Because you're in California,
again, it's expensive. That is exactly, kind of where
you guys have moved. You know, your husband's
job and his service, which is just incredible. But you guys are gonna have to make some lifestyle changes and
some changes to income. So, that may mean you going back to work
for a little bit of time. Or, again, if there's some income things that you guys can cut out. Maybe you move to a smaller rental. You can make different
decisions to help you guys in that buffer, because the key here is
now you were on baby steps, four, five and six. And now you're gonna have to go back and replenish that emergency fund, which is gonna be really key. And so, I think, for you guys, a great goal would be to at
least get a month's worth of savings before he deploys. That's something you guys can work toward. It gives you a little bit of that buffer and kind of that starting
launch pad to continue to save for that emergency fund. So, be very, very diligent in the budget. Find ways to save money.
Find ways to cut expenses. And get that back up as soon as possible. And it feels like really,
really, heavy for you because you guys have gone through a lot in a pretty short period of time, a lot of change, a lot of heaviness. What you have to realize
though, is that no matter what, no matter the situation,
you can do something about where you're at. And when you lose that
power, when you lose kind of that feeling of control, that's when the hopelessness
starts to set in. But be hopeful in the
fact that you can do something different with your money. You can actually start
to take control and get that emergency fund back. Now guys, again, this is a heavy topic. And the emergency fund,
it's there for you. And then when you go through it, that panic can kind of start to come back. That's exactly what I felt from her. If you guys have any questions
regarding an emergency fund or anything with money, make sure to call the voicemail. Leave your question at 844.944.1075. If you still aren't convinced
having an emergency fund is totally necessary, I've got some incredible stats for you. (piano music) (whooshing) All right, before we dive in,
(calm music) I wanna shout out
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and so will your family. Go to mamabearlegalforms.com and use promo code RACHEL for a special discount on your will. Okay, with all the layoffs and furloughs that have happened during the pandemic, 77% of those who are laid off said that they expect to get their job back once this is all over. That means not all hope is lost.
Yes, they just need some time, some cash in the bank to get them through
these next few minutes, and they will be totally fine. If you've ever wondered why I
teach having an emergency fund and why it's so important, this is why. But out of all the examples in life, we talked about car crisis, job loss, maybe even a health scare, which all of those semi- are what's happening right now. Maybe not the car thing for you. But a pandemic was never on the list. So, I think that's always
just an interesting thing I'm gonna add in the future. But the point is, we have
no clue what's gonna happen. We have no clue, and we
say it all the time. It's not if life is going to happen. It is when it is going to happen. Having a plan in place, you
guys, having money set aside is going to help you when life comes. Again, I said it earlier, but it's so true. It takes a crisis, an absolute freakout, just
into an inconvenience. Instead of completely panicking that your car is broken down, and you have no clue what you're gonna do in getting the car fixed and having to go into debt for it, you've now got a car problem and a financial problem. When you have an emergency fund, it's like, oh, we'll just fix the car. Like, it's that easy. We'll just fix the car. Having an emergency fund is so, so crucial to finding financial peace. If you need to save up
for your emergency fund, use my free Baby Step 3 goal tracker. Thousands of people have used
it to color in their progress. Now, let's hear from a couple who completely changed
their financial situation, which helped them during
the 2008 recession and now with COVID- 19. Welcome, Jason and Alison. Thank you guys for being on. - Thank you for having us. - Thank you for having us. - Okay, so tell me a little bit about your story and what made you guys wanna change what you're doing with money. - Okay, so, back in, you know, what they call
the crash, right? Back in 2006 and 2007 and 2008 . . . At the time, Alison and I were farmers. We actually worked on a farm. We made like $43,000 a
year, and we had no budget. At the time, I think we probably had
$1,000 in our bank account, and we had $19,000 in debt. I had heard this guy,
Dave Ramsey, on the radio, and I just decided, we were kind of sick and
tired of being sick and tired. Let's just listen to the program, see what it's about. And let's try to fix the mess that we got into. That's kind of how it started for us. - I love that. I think that's the point, right? You get to this point, like you said. And you're like, hey, I'm
tired of living this way. It shouldn't be like this. I shouldn't have $1,000 to my name, and thousands of dollars of debt. Like, this is not working. - 100%
- And so you guys really buckled down, and you decided to get on
a budget and start the plan. So I wanna know about the first budget. What was that like? (laughing)
Did you guys sit down to do it? What was it like between you guys? - So, the budget was interesting. I always envisioned a
budget as it was a bad word. And I actually just didn't
even wanna to talk about it. You probably wanna hear
about our fights, right? (laughing) - We all have them. We all have them. So, yeah. I'll hear yours. (laughing) - Because when we did the budget, my wife, she just trusts me. And
she's like, you do the budget. Well, that was not Dave's advice. Dave's advice is it needs
to be a group effort. So, I created the budget, but
I slid it across the table and said, hey look at this,
and can we agree to this? And there was one thing
you wanted different. - The clothing budget, of course. (laughing) Before we got on a budget, I always felt so guilty spending money. Like, every dollar I was like, am I taking
from our retirement? Am I taking from our kids? But after having a budget
for each one of those items, it just felt so good knowing that that money is for that particular item. - That's like the perfect example of that a budget doesn't limit your freedom. It gives you freedom. - Yes. - So, your life beforehand,
like you were saying, you were questioning every purchase, you were nervous that it was
stealing from retirement. All these questions,
but they're all answered in the budget. You don't have to have guilt or shame about it. It's there. It's planned for. I think that's incredible. So, I'm curious. How long
did it take you guys to get through Baby Steps 1–3. - So, Baby Step 2, to get out of debt, we had a fixed income. If I made not a single dollar more, which was gonna be the case, we were gonna go . . . It would take 18 months
to get out of debt. And then I ended up selling my Jeep, and my Jeep was like, at the time, was my prized possession. I sold that, because it
was paid off at the time, and it would catapult us forward so much, and it gave us an opportunity. I rode my bike to work every day. Rachel, we went from
$1,000 in our bank account and $19,000 in debt, nine months later, we had no debt and $14,000 in savings. This is why I credit Ramsey organization for saving our life. I lost my job. And if
that would have happened with that debt and with no money . . . I mean, my kids never knew. They never knew that I
went like almost six months with no income. And they never knew because of what your organization did for us. So, we literally credit
it with saving our life. I was not a Christ follower
when I listened to Dave originally, and none of my family were. He would say, hey, this is
how you should handle money. By the way, this guy Jesus said that. And I would be like, oh, that's cool. I just wanna hear about
the money stuff, right? But I now know, and at that time, we realized all of those things were leading us in a certain direction, because God already knew
where we were going, He already knew what was gonna happen. And we were just lucky to hear the call to do these things to set us up so that we will succeed, It was all because of
Dave and Chris Hogan and Rachel, and we're so
grateful and blessed for that. - That's amazing. That's the ultimate. (laughing) That's the our ultimate goal, right? And you even got there. That's it. The money stuff, like you said, we disguise it to show
Jesus to people. So, that's it. I mean, you found Jesus,
which is incredible. That's such a higher calling
of changing your family tree beyond even the money stuff. - Yes, 100%. 100%, we agree.
- That's an incredible legacy, an absolute incredible legacy. So, for you guys, though. Man. You change spiritually.
You change financially. For the better, in so many cases. Right now there are a lot of families that they're struggling, they're freaking out, they've had to dip into
their emergency fund because of the pandemic. What kind of motivation and what kind of hope can you
give those families out there? Because you guys have experienced
a little bit of that, you know, when you lost your job, not through COVID-19,
but earlier than that. So, what kind of advice do you
get for people out there who are kind of scared,
they're kind of worried, they haven't really started a plan. - I can guarantee that
anyone listening right now has probably been to a gym. And you know the first three
weeks of going to the gym is the worst, right? It's hard to wake up every day and do something that
you physically feel like is hurting you. - Follow through with it. - But after three weeks, you start to see a little bit improvement, and it starts to get fun. And after three months, you see a lot of improvement,
and you get stronger and faster. And things you couldn't do, you can suddenly do. It will be hard. There's no shortcut. You're not gonna just take money and put it into this account. It will take time. And it might take years. It literally could take years to do this, but it is so worth it. Because even if you keep your job. Even if you don't get sick. But what if you do lose your job? What if you do get sick? These things could happen. When those things happen in our lives now, we walk different, talk different. - Yeah, it's . . . Now, it feels so good to be
able to give to people, to be in that position, people that are struggling
or having a rough day, we can give. - We're so grateful for the sacrifices, that we made up front so that we could live this life. And I want that for all
Americans because it is possible. It is totally possible. No matter what income you make, you can do this. You just have to stay the course. - It's amazing. Well, you guys are the complete picture of what it looks like to
take control of your money and do something different. You changed your money habits. You changed the way you viewed money. You found the truth of how money works. You applied it to your life. You actually did the steps. And now, here you are, debt-free completely, money in the bank and able to take a whole other career into real estate. It's just absolutely incredible. You guys, thank you so, so much for being on.
- Thank you. - If you want to learn everything that they just did, what
they just talked about, make sure to go to
daveramsey.com/hope and go through our free 14-day trial of the nine lessons of
Financial Peace University. You're gonna learn so much and learn how to take
control of your money and be like these guys. I mean, absolutely incredible. All right, coming up next
(calm music) is my dad, Dave Ramsey. (whooshing) As a mom, every day,
(soft music) I take precautions to give
my family peace of mind. It's simple things, like
locking the front door, making sure the car seats are buckled in, and putting my phone
away when I'm driving. But we don't always think
about the bigger things, like what if something
happened to you or your spouse? That's why you need term life insurance. It makes sure your family's taken care of no matter what happens. I trust Zander Insurance. They keep my family protected, and that gives me such peace of mind. They make things super simple and find the best options and prices. To learn more, call Zander today or go to Zander.com. Make sure your family has the
term life insurance they need. (upbeat music) Thanks for coming back on. - Obviously wonderful. Glad to be here. - One of my favorite guests. (laughing) Thanks for being here - Its mandatory that I'm your favorite. - Of course
(laughing) So you've been, obviously,
talking to people for decades about getting an emergency
fund and the importance of it. Everything that's going on in our country with the pandemic, everything happening, a lot of our tribe, who
has possibly lost jobs or being furloughed, has had to dip into their emergency fund. So, have you seen that really be the case? - Yeah, a lot of them have. But more than anything, they just had peace with it being there, and then they were able
to work their budget and didn't actually have to dip into it. Of course, it's a case-by-case basis, if somebody lost their job, both people lost their job, and they had a bunch of
other things going on. But usually they've been
able to manage their budget and not hit it. But in the case that they
did, that's what it's for. - That's right. I think a lot of people,
when they dip into it, I've heard they feel like they're like,
they lose progress. They feel like they're going
backwards in the Baby Steps. But just reaffirming to people that that's why it's there. So, you're not going backwards, in a sense, because you're going to fill it back up. You're gonna get that fully funded emergency fund back. But I think a lot of people
feel like they lose steam or that they're doing something almost wrong by dipping into it. - Well, I mean, you are going backwards, but it's not like a Baby Step sin. You haven't sinned the
Baby Steps or something. It's just, you use your
emergency fund for an emergency. That's what it's for. But that does mean you took a step back. And you're going to fill it back up, and then you're going to move back on. That's okay, though. That's what it's for. There is a rhythm to life. Hopefully, we never have to
touch our emergency fund. But the reason we have an emergency fund is we know emergencies happen. So, it's probable that at
some time in your life, you're gonna have to tap that thing. And that's okay. - So talk about, outside
pandemic stuff, again, going back 20 years of talking to people. How normal is it for people to say, oh, yeah, they call you on the show, or you talk to them, and they say, yeah, we had to
actually use this money. Because again, I think a
lot of people watching or that have it, there is
this kind of guilt like, oh, it's there, yeah. But I
don't even want to touch it. This feeling. But that it's normal, that if you're in a situation that you have to have that
money, you dip into it. And that's okay. That's a good thing. - Well, if you think about it,
what is the nicknames that we give the emergency fund? The classic one is, grandma
called it your rainy day fund. Why? Because sometimes it rains, you know? And rain is to be expected, so you carry an umbrella. And so, that's a rainy day fund. One lady, we've classically talked about this in Financial Peace University for years. One lady called it her GOK fund, her God Only Knows fund. God only knows what's gonna happen. Because he does. He's the only one that knows what's gonna happen. Something's gonna happen, though. Life is gonna happen. And stuff happens. I saw it on a bumper sticker. You know, you just gotta be ready, and you gotta go, that's part of it. It's like saying my transmission broke. Of course it did. It's a transmission. It's eventually gonna break. That's just, stuff is gonna happen. You're gonna have things come at you that are unexpected. And that's the definition of an emergency. - So, for people, it's funny. We
classify emergencies like with car repairs or a health issue. But a pandemic is one
that's never been used as an example of an emergency.
(laughing) - Well, no. If we had used that, we would have been
accused of being crazy. - Yeah, some conspiracies . . . - Someday, there's gonna be a pandemic, and you better be ready. Can you imagine the hate mail I would have gotten if I had said that? - So, what are you seeing from people, because of the pandemic and
everything that's happening? What is kind of the top emotion or so of people, even if they
had emergency fund or not. But how is this really
affecting their finances? - I think the folks that didn't, the phone is ringing. When they pick it up, they realize it's their wake-up call. If you weren't ready, and
this thing came at you, this is your reminder to get ready. Because it's not gonna be
another pandemic, says Dave. But, I mean, who knows? God only knows, right? But it's gonna be a transmission. It's gonna be Aunt Gertie on the
West Coast passes away, and you have to chip in on our funeral. There's gonna be stuff
happening in your life. And to walk around with no money, and deeply in debt and no plan. How's it working for you? It's not. When I went broke, it
was because I was stupid, and I didn't have any money. I didn't keep any cash. I didn't keep any liquidity. And I built a house of cards with debt. When I went broke, that
was my wake-up call. And I had a never again moment. Some folks are having
a never again moment. The ones that are sitting there with the emergency fund, they feel like the three little pigs, one built a straw house and one built a house of sticks, and one built a house out of bricks. And when the wolf came and blew on the brick house, nothing happened. And they feel like they're the pig with the
brick house right now. They feel like, hey, I'm set. Blow away, big bad wolf. I've got my cushion here. I don't have any debt. Gives me lots of margin. Because see, if you don't have
any payments going out, and you've got a pile of money, even if you do lose your job, you can go a long time, a long time. But the added payments adds
to the drain, the burn rate, out of the checking account. - It does. And that level of fear that's
there when you don't have it. - Oh, yeah. It's a total oh, crap moment. - Yes.
- Oh, crap. You're just, what happened here? - So, for people that did dip
into their emergency fund during the pandemic for a job loss, or whatever the case may be, what's your advice to
people to fund that back? What are the things that they need to do, not only emotionally, to
get Gazelle intense again, but also tactically, what can they do? - Obviously, you need
to pay attention to it. You've gotta be ready for the next thing, and there will be a next thing. It may not be a culture-wide thing. It may be an individual
thing to your family. But you've gotta be ready for the next thing. We have to stop what
we're doing and do that. I would just look at your income and your budget, and say, how fast can we put this back if we don't stop our
401(k) and Baby Step 4? And if it's gonna take a year, you may want to stop at 401(k) again and go back to Baby Step 3 and do it. But if you can put it back,
and not mess with your 401(k), in three or four months, then put it back. And just keep doing it that way. I don't care either way,
but address the issue. Because the very fact that you used it, it's just like the people that didn't have an emergency fund. This is confirmation
that this is a good idea. - That's right. Okay, so when you look at people's budgets, what are the top few categories? You're like, yeah, you can cut these out. Just fund that and put
some extra cash away. - I think you just go
back to beans and rice. How bad do you wanna not stop your 401(k)? Do you wanna cut some lifestyle out, or do you want to temporarily
stop your 401(k)? But you may have to do both to get the emergency fund, depending on
how big a hit the thing took. But that's your worst case scenario. If it's me, I'd probably back off on
the lifestyle a little bit and keep the 401(k) going, and let's fix this
thing in a couple months. But you could do it either way. - Yep, absolutely. So good. Good practical advice. Some motivation to get back Gazelle intense to fund
that back. And again, the importance of it. I know we've been saying this during whole pandemic conversation, that getting out of debt, and
having cash available, and having a plan—it works. It works during the good times, and it works during the crisis. So, knowing that you're in control. - If you get the call, and you answered it, and it's the wake-up call, answer the call and say, never again. I'm now awake. I now realize about this. Maybe I was kind of in a haze, and I wasn't paying attention. Kind of, I was doing Ramsey-ish, or I hated Dave Ramsey, or whatever. Dave Ramsey's a cuss
word at my house. Whatever. I don't give a crap. Whatever the deal is. But the phone rang. Are you awake? Never again. Don't let
yourself ever be there again. - Yeah, keep that that urgency with you outside this pandemic. Keep it going. Let that be
your motivation for sure. Thanks for coming on. - Honored to be here.
(upbeat music) - Chatting emergency funds. I love it. Thanks to Jason and Alison
for sharing their story. And I hope you guys download the Baby Step 3 goal tracker to highlight your progress as
you build up your emergency fund. I want you guys to share two takeaways from this episode in my official Facebook group. And make sure to subscribe
to my YouTube channel and check out
The Rachel Cruze Show podcast. And, as always, make sure to take control of your money and create a life you love.
