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Ask Dave

Waiting For Stabilization

Jennifer says her husband used to make $60,000 but he's been unemployed since November. They're struggling financially. After the savings is rebuilt, do they continue to save money?

QUESTION: Jennifer in Nashville says her husband used to make $60,000 but he’s been unemployed since November. The job hunt isn’t going well, and they’re struggling financially. After the savings is rebuilt, do they continue to save money?

ANSWER: Yes. You are in the middle of an emergency—a career crisis at your house. While you’re in the middle of an emergency, you push pause on your Total Money Makeover Baby Steps and you pile up money. Money is your umbrella for the rain you’re in. It keeps you dry. I don’t care if you build up $15,000 or $20,000 in savings. Just keep piling it up until we stabilize this career situation. Once the career situation is stabilized and you want to push play on your Total Money Makeover, you could take all that money out of savings down to $1,000 and throw it at the debt snowball, and you really won’t have lost much ground. A little bit of interest is all that would’ve cost you, but right now your household needs the peace of mind of a pile of cash. I would be on a tight written budget as if you were doing your Total Money Makeover—the two of you working together—and he needs to be working at something—part-time jobs or something—while he’s not working.

In the process of this whole thing, really be managing those dollars and throwing as many toward savings as you can. You’re not going out to eat. We’re not adding to the cable bill. We’re not going to go buy stuff. We don’t have any money. We’re in the middle of a storm. We’re piling up cash—just like you were being gazelle intense to get out of debt, only you’re gazelle intense to pile up cash as big a pile as you can get until the career is stabilized. Then push play again and blow right through your Baby Step 2.