Ramsey Show hosts urge Memphis woman to abandon real estate dream — why they want her to focus on quick cash instead of real wealth for now

She’s been with her partner for four years and they live together. During this time, she’s paid off her car and all her debts, and has about $8,000 in savings. Now she’s wondering if she should be investing that $8,000, “maybe buying a quadplex” (1).

Putting aside the fact that $8,000 likely isn’t enough for even a down payment on a quadplex in Memphis (those currently go for around $200,000-$400,000 in the city) (2), host Jade Warshaw’s first question wasn’t about investment goals.

She wanted to know Sarah’s timeline for leaving her partner, which Sarah said was six to eight months.

“Tell me what’s precluding you from going now,” Warshaw asked, adding that building wealth is a distinct goal from saving up first and last months’ rent for an apartment.

When your physical safety or mental well-being is at stake, financial priorities should shift.

Warshaw advised against investing in real estate.

“Cash is your friend. You need liquid money,” she said, adding that building wealth can come later — after Sarah takes steps to remove herself from a toxic and possibly dangerous situation (1).

When to prioritize liquidity over growth

Being on the path to building wealth is not the same as meeting the baseline criteria for being financially stable enough to move out on your own. Although the impulse to chase returns to make money more quickly is understandable, if you need access to cash for things like rent, moving expenses and furniture, investing could backfire. Market volatility or liquidity constraints could derail your exit plans.

Toxic relationships, whether physically or emotionally abusive, often also involve financial abuse. In many cases, the abuser restricts access to money, making it much harder to leave.

According to a 2022 report from the Center for Survivor Agency and Justice, among people seeking help for domestic violence, 86% said their partners restricted how they could spend money, and 78% said they were forced to spend money on things they did not want to buy (3).

Financial abuse can come in many forms, according to the National Network to End Domestic Violence (NNEDV). For example, the abuser might control how their money is spent or make all banking and investment decisions. In more extreme cases, the abuser might forbid the victim to work, sabotage employment opportunities or withhold funds for basic needs such as food or medicine.

“In the short-term, access to assets is imperative to staying safe. Without assets, survivors are often unable to obtain safe and affordable housing or the funds to provide for themselves or families,” according to NNEDV. With “realistic fears of homelessness,” they may stay in an abusive relationship or return to an abusive partner after leaving (4).

Fortunately for Sarah, she’s financially independent. She has her own bank account. She’s not in debt. And she has some money in savings. But her take-home pay from her $17/hour job as a medical assistant is only about $2,300 a month, and she doesn’t have any friends or family nearby to help.

And that makes it challenging to leave. Ideally rent should be about 25-30% of your take-home pay, Warshaw said (1). So in an ideal situation, Sarah would only spend about $600 or $700 on rent — not realistic at her income level.

But she still has options, and building wealth can come later.

Related: 3 ways to make your cash work harder

Financial steps to independence

If you’re planning an exit from an abusive relationship, a stash of cash that the abuser cannot access is critical. You’ll also need a roof over your head, which could mean staying with a friend or family member — or even a shelter — until you can get on your feet.

In Sarah’s case, Warshaw recommends splitting the costs of an apartment with a roommate or looking for a cheap short-term rental. This doesn’t have to be a long-term living situation. It’s an immediate step Sarah can take to get out of a toxic environment.

Once that’s settled, she can start looking for higher-paid work and building an emergency fund that covers three to six months of expenses.

“Right now an emergency could tank you,” co-host George Kamel said. Only then should she consider investing for the future, whether it’s eventually buying a home or saving for retirement.

Building wealth through investing is something for Sarah to think about in the long term, not now.

“Time makes all the difference when it comes to taking risk with your investments and the ability for your account to recover from market drops,” according to Fidelity. (4) If you’re in a precarious situation, you may not be able to afford to take those risks.