A new single mom in Irvine, Calif., believes a $1.3 million divorce settlement can provide stability after what she describes as a “really bad divorce.” Instead, she found herself staring at an $8,000-a-month rent bill, which she said “almost felt illegal.”
She recently called “The Ramsay Show” to ask what to do next.
Karen, a stay-at-home mother of two teenage children, finally got divorced after a five-year legal battle. The house was sold, taking her with about $1.3 million, which is now in a high-yield savings account. She also receives $15,000 in monthly spousal support, but only temporarily. The support will be reassessed in November, with future payments uncertain as her ex-husband battles addiction.
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Her personal income tells a different story. She recently returned to work after 20 years and now makes about $5,600 a month after taxes.
“I don’t live a luxurious life,” she said. “I live a simple life.”
‘But you’re in Irvine,’ personal finance expert Dave Ramsey replied. “You’re in one of the most expensive real estate markets in the world.”
According to Redfin, there were 528 luxury homes for sale recently in Irvine, with a median listing price of $1.67 million. Homes typically stay on the market for 62 days and receive approximately two offers. A total of 123 homes were sold in the past month. There are also 401 apartments and 44 townhouses on the market.
In other words, prices remain high and demand is stable.
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Even with $1.3 million in cash, buying at the median price may require a mortgage if closing costs, property taxes, insurance and homeowners association fees are factored in. With only a steady income of $5,600 per month, qualifying and making the payments will be difficult.
“I’m sorry you went through hell, girl, it’s heartbreaking,” Ramsey said. “You’re so smart that even in all your pain, you’re starting to see that the math doesn’t work.”
Ramsey acknowledged the emotional impact of uprooting teenagers, but he was more focused on long-term stability. “They can’t live in Irvine anymore,” he said. “You have no money.”
