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.”
The deeper question isn’t whether $1.3 million sounds like a lot. The question is whether ongoing expenses are consistent with guaranteed income. The $8,000 rent was more than she was making from her job. Once alimony is reduced or eliminated, making up the shortfall means dipping into savings month after month.
This approach could slowly erode the savings that were supposed to protect her and her children in the long term.
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For people like Karen, the path forward may include relocating to a lower-cost area and protecting principal rather than using it to subsidize rent.
For readers who think about real estate in a different way, platforms like Arrived offer another perspective. Arrived allows people to invest in rental homes for as little as $100 without having to fix toilets or manage tenants. The company paid out more than $1 million in dividends last quarter, giving ordinary investors an easy way to get real estate investments without buying an entire property.
Karen’s call is a reminder that in a place where housing costs run into millions of dollars, even a seven-figure settlement can feel small. As Ramsey told her, “If $8,000 is the cheapest you can find, you’ve got to go somewhere else, kid.”
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This article A stay-at-home mom received $1.3 million in divorce settlement, but $8,000 in California rent is still too much. “It almost feels illegal” originally appeared on Benzinga.com
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