Dave Ramsey Says: Erase $5,000 Credit Debt With Settlement Money, Then Cut The Card


Dear Dave,

My husband and I are going to divorce and everything will be final in less than a month.

I haven’t worked outside the home in a few years, but under the terms of the divorce, I will receive $75,000 in cash the day the divorce is finalized.

I also have a credit card debt of about $5,000 which I am responsible for paying. Other than that, I have no debt.

Can you give me advice to move forward in my life?

– Starla

Dear Starla,

I’m so sorry to hear you’re going through this. If you are not already connected to a good church, I hope you will consider finding one. Having caring people of faith around you at times like this can help a lot.

Credit card debt is only a small part of your financial situation right now. Still, my advice is to go ahead and pay it back as soon as you receive the settlement money. This way, you will have no more debt and you will always have $70,000 in the bank.

There is a small catch, however. You will need to live for a while as if that money was not there.

Use just enough to settle somewhere else, if that’s a consideration, then start looking for a job so you can eat and pay for utilities.

There are tons of places hiring right now, and the money is decent, so it shouldn’t be too hard to start making a steady income soon.

If you do, that big chunk of money will still be there a year from now when the pain of divorce has eased a bit.

At this point, you will be stronger and more emotionally and mentally ready to think about the future and make real plans.

And if you haven’t already, cut off that credit card and close the account.

The last thing you need right now is a way to get into more debt. God bless you, Starla.

— Dave


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