Author: Vawn Himmelsbach

Memphis can be downright steamy. The average high in June is 89°F, climbing to 92°F in July.  In these conditions, air conditioning isn’t just a luxury, it’s a necessity. And not having it could render a home uninhabitable.

In the midst of such heat, one Memphis mother and her four-year-old son have been waiting weeks for her air conditioning to be fixed. She was cooling off in her car when WREG News Channel 3 Memphis spoke to her.

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When a home is uninhabitable

“My car feels way cooler than it does in my apartment,” Jada Robinson told the news outlet, adding that her efforts to have the apartment complex fix her air conditioning have gone nowhere. “They said they would fix [it], but nobody has [come].”

She’s been staying in hotel rooms but can’t afford to keep that up.

“I paid my rent for the month, I shouldn’t be going through this,” Robinson told WREG. “So I will have to go stay with my family.”

When her lease ends in July, she plans to move out so she can improve her son’s living conditions.

Robinson didn’t discuss her means, but if she’s like many Americans, she may find that an emergency expense — like having to stay in a hotel — is a strain on her finances. After all, six in 10 (59%) of Americans can’t pay a $1,000 emergency expense out of their savings.

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America’s housing affordability crisis

This isn’t surprising, given that residual income (the amount of money households have left over after paying rent and utilities) has fallen to record lows for some renters.

In 2023, renters with an annual household income of less than $30,000 had a median of $250 per month in residual income — down 55% from 2001 — and households earning $30,000 to $74,900 saw a 10% drop to $2,700, according to The State of the Nation’s Housing 2025 report from the Harvard Joint Center for Housing Studies (JCHS).

“Nearly two-thirds (65 percent) of working-age renters cannot cover their non-housing necessities,” the report stated, which means “many households are forced to make tough trade-offs to pay the rent, spending less on healthcare and food or relocating to unsuitable housing or neighborhoods far from transit, employment or social networks.”

This drop in residual income is driven by the ongoing housing affordability crisis in the U.S. This, in turn, is leading to a growing number of Americans having to pay more than 30% of their income for housing and utilities — making them what the U.S. Department of Housing and Urban Development (HUD) refers to as “cost-burdened.”

In 2023, 83% of renters earning less than $30,000 were cost-burdened and two-thirds (67%) of these households were severely cost-burdened, spending 50% or more of their income on housing.

But it’s not just low-income earners who are struggling with housing costs. “Burdens have risen most dramatically for renters toward the middle of the income scale,” according to the report.

In 2023, 70% of renters with incomes between $30,000 and $44,999 were burdened, as were 45% of those with incomes between $45,000 and $74,999. And while renters are particularly hard hit, nearly a quarter (24%) of all homeowners were cost-burdened in 2023.

Tenants have rights to a liveable home

While Robinson plans to move, some renters in a similar situation may be stuck in substandard housing. Still, no matter how much they earn or how much they pay in rent, tenants do have rights.

Knowing and exercising your rights can help make your housing situation more tolerable.

Your rights as a renter vary by state, so you may want to familiarize yourself with what repairs your landlord is responsible for in your area and the time limit for completion. Websites such as iPropertyManagement.com can help get you started.

If you’re uncomfortable advocating for yourself or find your landlord to be unresponsive, you may want to seek legal help. Many cities have organizations that can provide advice and advocacy, even if you can’t afford to pay.

A good place to begin your research is USA.gov, which has a tenants’ rights page that provides links to organizations in each state. After all, nobody should have to live in an uninhabitable space.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

From The Great Resignation to quiet quitting, there’s been no shortage of trends over the past few years that reflect growing dissatisfaction and disengagement in the workplace.

The latest is quiet cracking, a phrase coined by TalentLMS, a learning management system company. The term describes a persistent sense of burnout and stagnation that leads to disengagement, poor performance, and a quiet urge to quit.

Research from TalentLMS found that one in five employees (20%) are experiencing this phenomena on a frequent or constant basis, while another 34% say they experience it occasionally.

“Unlike quiet quitting, it doesn’t show up in performance metrics immediately. But it is just as dangerous,” according to TalentLMS’s report.

And there’s a tangible cost to this: Each year, disengaged employees cost the global economy $8.8 trillion, according to Gallup.

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What is quiet cracking?

While quiet quitting refers to workers who purposely slack off at a job they no longer want, quiet cracking refers to those who “gradually become mired in feeling both unappreciated by managers and closed off from career advancement while doing work they otherwise like,” according to an article in Inc.

Or, as TalentLMS puts it, people who feel “some kind of workplace funk.”

It goes beyond employee disengagement. Rather, “it’s something deeper and harder to detect,” according to TalentLMS. Employees are “silently cracking under persistent pressure.”

Those who frequently or constantly experience quiet cracking are “68% less likely to feel valued and recognized at work” compared to their peers, while only 62% feel “secure and confident” in their future with the company.

But this trend is also hard for employers to pinpoint. And even employees don’t always recognize the warning signs until they’re “spinning their wheels doing jobs they’re losing interest in yet stick with, fearing it will be too difficult to find a new one,” according to Inc.

The TalentLMS survey of 1,000 U.S. employees found that their top concerns include:

• Economic uncertainty
• Workload and job expectations
• Poor leadership or uncertain company direction
• Layoffs or restructuring
• Lack of career advancement opportunities

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The trends impacting quiet cracking, and how to mitigate them

The TalentLMS survey of 1,000 U.S. employees found that top concerns include:

• Economic uncertainty
• Workload and job expectations
• Poor leadership or uncertain company direction
• Layoffs or restructuring
• Lack of career advancement opportunities

If so many employees are quietly cracking, what can employers and employees do about it? Recognizing what causes this condition is the first step toward finding solutions.

The solution to this isn’t actually that complicated, according to Nikhil Arora, CEO of Epignosis, the parent company of TalentLMS.

“When people feel stuck, unheard or unsure about their future, that’s when disengagement creeps in. Giving employees space to grow — through learning, skilling and real conversations — is one of the most powerful ways to turn things around,” he said in a release.

1. Uncertainty and overload

It’s important to set expectations and balance workloads, since 29% of employees say their workload is unmanageable. This can be done by auditing workload distribution and providing stress management tools to employees.

This can help them “rediscover a sense of purpose and forward momentum, something we all seek at work and in life.”

2. Lack of recognition and growth

Respondents who experienced quiet cracking are also 152% more likely to say they don’t feel valued and recognized for the contributions at work. One of the simplest ways to combat this, according to TalentLMS, is to regularly recognize employees for their contributions.

It’s also important to set expectations and balance workloads, since 29% of employees say their workload is unmanageable. This can be done by auditing workload distribution and providing stress management tools to employees.

3. Few learning or career advancement opportunities

The survey found that employees who received training in the past 12 months are 140% more likely to feel secure in their jobs — and TalentLMS advises employers to “double down on learning and development” with “structured, ongoing learning paths.”

When it comes to combatting doubts about career advancement, “employers must show belief in their employees’ potential, which includes supporting growth, even when resources are tight,” according to an article in HR Executive. That could include mentorship and training opportunities, as well as clear communication about future paths.

What employees and employers can do

Employees who recognize the symptoms of quiet cracking can talk to their manager about managing their workload or clarifying job expectations. They could also provide suggestions to improve morale (such as peer-to-peer recognition) and ask about training and development opportunities. If these efforts turn out to be fruitless, it may be time to look for another job.

Employers who want to tackle this form of disengagement can get started by auditing their current engagement efforts, identifying “gaps in managerial support and recognition,” and starting small “with consistent feedback and learning programs,” according to TalentLMS.

As the report points out, quiet cracking isn’t a well-being issue. Rather, it’s a business issue: “When employees quietly crack, they take productivity, creativity and loyalty with them.” Because when employees quietly crack, companies loudly pay the price.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

With consumer household debt hitting record highs, more Americans are picking up extra work to cover bills and becoming reluctant hustlers.

A new survey from AI-powered career platform Zety found that 38% of respondents have taken on side gigs or second jobs to make extra money and keep up with their debt. The online poll of 1,005 U.S. employees was conducted by Pollfish.

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Not one respondent reported being debt-free. In fact, 43% said they’re carrying more than $25,000 in debt, and one in five said they owe at least $100,000.

That’s why some Americans are “taking on side jobs for extra cash, accepting roles they don’t want, and making urgent trade-offs to manage their financial obligations in an increasingly volatile economy,” according to the report.

The rise of the reluctant hustler

This trend lines up with other data about the labour market. The number of Americans holding multiple jobs steadily increased from 2010 to 2020, according to the Federal Reserve Bank of St. Louis. After a dip during the pandemic, those numbers have bounced back to record levels.

And this rise in side hustles isn’t slowing down. A Harris Poll for the American Staffing Association (ASA) found that more than six in 10 employed U.S. adults say they’re likely to pick up extra work in the next year.”

“For growing numbers of Americans, a side hustle can be a good way to build savings, pay off debt, find a new job, or change careers. However, for others, a side hustle means having enough money to make ends meet,” said Richard Wahlquist, CEO of ASA, in a release. “With economic uncertainty dominating the headlines, it’s not surprising to see Americans looking for ways to create some breathing room in their budgets.”

Zety’s survey also found that most respondents are shifting their financial habits to manage debt and prepare for potential fallout from U.S. policy changes. Nearly four in five (78%) believe tariffs will make it harder to repay or avoid debt.

To cope, 38% said they’ve cut back on non-essential spending and 25% have increased their minimum payments. Others reported transferring balances (13%), delaying repayment (14%), consolidating debt (8%), refinancing (5%), seeking financial counseling (5%) or negotiating with lenders (4%).

Meanwhile, U.S. consumer confidence continues to deteriorate across most age and income groups, according to The Conference Board’s Consumer Confidence Index. And despite inflation cooling, real wages haven’t seen much growth over the past decade. From May to June, real average hourly earnings dipped 0.1%, according to the Bureau of Labor Statistics.

Stagnating wages and fears of rising costs from tariffs and trade disputes are putting added strain on American households.

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Debt is carving new career paths

Student loans, medical bills and credit card debt are forcing many workers to take jobs outside their skill set, accept precarious roles or put their career ambitions on hold.

Debt isn’t just pushing Americans toward side hustles; it’s also influencing work and career choices. A Harris Poll conducted for ASA in August 2024 found that 73% of American workers are in debt, and 40% of them said their debt is influencing their career choices.

Roughly a third of Zety’s respondents said they’ve taken jobs they didn’t want or were outside of their industry to manage debt. Another 17% said they would start a business, return to school or freelance if they weren’t carrying debt.

“Debt is a growing force behind why people take certain jobs, stay in roles longer than they’d like, or hesitate to make a career pivot,” Priya Rathod, a career trends expert at job site Indeed, told CNBC.

And the pressure isn’t likely to ease any time soon. Household debt remains at record highs, and debt service payments as a percent of disposable income are creeping back up from historic lows.

But before jumping into a side hustle, it’s worth taking a hard look at the math. According to the Federal Reserve, workers with multiple jobs put in 174 more hours a year than single-job workers, yet earn $1.01 less per hour on average. That adds up to just $900 more annually.

“People really need to understand that working more hours is a short-term solution, and growing your main income is a long-term strategy,” Rathod told CNBC.

If your side hustle brings in good money, it might be worth the extra effort. But if it’s low-paying or unstable, you may be better off focusing on your current job, asking for a raise, pursuing a promotion or even changing careers altogether.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Credit cards are popular with Americans — and so are the points, rewards and perks that come with them. That’s why some Americans devote time and energy (and spending) to optimize multiple rewards programs and claim rewards they wouldn’t otherwise be able to afford, such as flying business class.

The number of credit card accounts in the U.S. has increased steadily over the past 15 years; in 2023, 82% of adults had a credit card.

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About half of cardholders carry a balance and, in the first quarter of 2025, Americans were carrying a near-record total of $1.18 trillion in credit card balances.

But economic uncertainty and pending legislation are about to change the rewards landscape — and not for the better.

Consumers can’t get enough of credit card rewards

Rewards have played a part in the growth of credit cards (and debt) by helping credit card providers attract and retain customers.

“The reward point functions as an alternative currency with real economic value, yet it continues to carry aspirational and emotional significance,” So Yeon Chun, an associate professor of technology and operations management at INSEAD, recently told Business Insider.

“In other words,” he said, “rewards have become a dual-purpose behavioral currency: A tool for economic relief and a channel for emotional and symbolic value.”

Redeeming rewards “can have an outsize effect on satisfaction” on cash-strapped consumers, according to Bain & Company.

A few years ago, rewards redemption was a “routine episode, or interaction that fulfills a need, unlikely to faze customers,” according to the global management consulting firm. “But it has since become a ‘moment of truth’ — an episode with a high likelihood to delight or annoy, depending on how well the credit card provider executes the end-to-end process.”

At the same time, rewards have economic value that consumers are using to make day-to-day purchases and cover necessities.

“Most consumers, including middle-income earners, now use rewards not just to manage spending, inflation or debt, but also to preserve lifestyle,” Chun told Business Insider.

Consumers had amassed reward balances of more than $33 billion by the end of 2022, according to the Consumer Financial Protection Bureau (CFPB).

And those rewards are “incredibly popular,” according to the Ipsos Consumer Tracker, summing up the results of a 2024 poll. Seventy-one percent of Americans have a rewards or cashback credit card, and about one in five younger Americans (ages 18-34) use the rewards for experiences they “couldn’t afford otherwise.”

But it also found that over a third of respondents said they wouldn’t spend as much on their credit cards if rewards weren’t offered.

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Dark clouds on the rewards horizon

Despite their popularity, economic headwinds may cause a reduction or restructuring of rewards programs similar to what happened during the Great Recession, when 0% balance transfer programs were cut back dramatically.

While economic prognosticators disagree as to how likely we are to enter a recession in the near term, continued near-record levels of economic policy uncertainty are having much the same effect on business decisions as a recession.

For instance, airline reward programs have already started to lose value — and other perks may soon follow.

“In the more typical downturn, we are likely to see a different kind of shift. Issuers will preserve the appearance of program stability while quietly reducing average value,” Chun told Business Insider. “Redemption thresholds may rise, expiration timelines may tighten, bonus categories may rotate more frequently, and access to high-value redemptions will become more conditional.”

Even more concerning to consumers who’ve racked up rewards, those programs may disappear altogether in the U.S. — despite their popularity.

Senator Dick Durbin, a Democrat from Illinois, and Sen. Roger Marshall, a Republican from Kansas, are driving efforts to move the Credit Card Competition Act through Congress.

The bill would reduce interchange fees, which are the fees charged to merchants that allow them to accept credit cards. These fees are a source of revenue for credit card companies and help to fund rewards programs. Some major airlines have already warned that if the legislation passes, frequent flyer programs could disappear.

At the same time, credit card providers can devalue your rewards at any time (which can also happen naturally with inflation) — so accumulating and hoarding points may not be in your best interest.

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Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

A low unemployment rate typically signals that an economy is generally healthy. The unemployment rate in the U.S. remained near a 50-year-low in April 2025 at 4.2% — plus, American employers added 177,000 jobs in April despite the uncertainty of Trump’s tariffs and trade wars.

This all sounds good, right? Not so fast.

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The “true” rate of unemployment in April, according to the Ludwig Institute for Shared Economic Prosperity (LISEP), was 24.3%, up 0.03% from the previous month. LISEP’s True Rate of Unemployment (TRU) includes the unemployed, as well as workers who are employed but still struggling.

“We are facing a job market where nearly one-in-four workers are functionally unemployed, and current trends show little sign of improvement,” said LISEP Chair Gene Ludwig in a statement published on PR Newswire.

“The harsh reality is that far too many Americans are still struggling to make ends meet, and absent an influx of dependable, good-paying jobs, the economic opportunity gap will widen.”

That could help explain why, despite the supposedly healthy employment rate, consumer confidence in the American economy has been plunging.

What is ‘functional unemployment’?

So, why is there a 20-point difference between the LISEP and Bureau of Labor Statistics (BLS) unemployment numbers? The BLS collects a massive amount of data on unemployment, but some of that data is excluded from the official unemployment rate.

For example, BLS found that 5.7 million people who aren’t employed do, in fact, want a job — but they weren’t counted as unemployed because “they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job,” according to BLS.

LISEP uses data compiled by BLS, but instead of simply measuring unemployment, LISEP measures what it calls the “functionally unemployed.” This is defined as the portion of the U.S. labor force that “does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.”

Its metrics capture not only unemployed workers, but also those stuck in poverty-wage jobs and those working part-time but can’t get full-time work. LISEP’s measurements aim to include these functionally unemployed Americans to provide a more complete picture of unemployment across the country, including the nuances that other economic indicators miss.

This, in turn, can help “provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics,” according to LISEP.

“Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development,” Ludwig said. “This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill.”

Ludwig says the public would be “well served by a commitment from economic policymakers to adopt a stable course of action” based on real-world metrics.

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The gap between official and ‘real’ numbers

LISEP uses two important differentiators in its metrics. First, to be considered fully employed, an individual must have a part-time job (with no desire to work full time, such as students) or have a full-time job working at least 35 hours per week.

Second, the individual must earn at least $20,000 annually, adjusted for inflation and calculated in January 2020 dollars, as per the Department of Health and Human Services’ U.S. poverty guidelines.

While “not technically false,” LISEP says the rate reported by the BLS is “deceiving,” considering the number of Americans in the workforce who are “employed on poverty-like wages” or “on a reduced workweek that they do not want.”

“For example, it [BLS’ unemployment rate] counts you as employed if you’ve worked as little as one hour over the prior two weeks,” Ludwig told CBS MoneyWatch. “So you can be homeless and in a tent community and have worked one hour and be counted, irrespective of how poorly-paid that hour may be.”

TRU also paints a bleak picture for certain demographics, with Hispanic and Black workers faring worse than white workers and women faring worse than men. For example, 27% of Black workers and about 28% of Hispanic workers are functionally unemployed compared to 23% of white workers.

Every month since 1995, black Americans have had a “meaningfully higher” TRU than caucasian Americans, according to LISEP.

The TRU numbers suggest the U.S. economy is much weaker than the BLS unemployment rate would have you believe — particularly for lower- and middle-income Americans — and that there’s a need for policy solutions that reflect this more nuanced reality.

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• Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead

Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

With cuts to Social Security staffing and programs, rumors of privatization and an impending funding shortfall, it’s no wonder some Americans are worried about the program’s future.

Nearly one in three adults age 60 or older now doubt their retirement benefit will be there when they need it, according to a new poll from the Associated Press-NORC Center for Public Affairs Research conducted in April. That’s a jump from 2023, when only one in five older Americans felt the same.

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How you feel, though, may depend on your politics.

A partisan divide

That doubt is particularly strong among older Democrats. About half say they’re “not very” or “not at all” confident that Social Security will be there for them. Just a year ago, only one in 10 felt that way. At the time, Democratic President Joe Biden was in the White House.

Older Republicans, on the other hand, are feeling more secure. Six in 10 say they’re “extremely” or “very” confident in the program — up from just one-quarter in 2023

Younger adults show less confidence overall. About half of Americans under 30 say they don’t trust that Social Security will be there when they retire, regardless of political affiliation. But that view hasn’t shifted much since last year.

As of 2025, nearly 69 million Americans will receive a Social Security benefit each month.

Under the Department of Government Efficiency — or DOGE — launched during Donald Trump’s presidency, until recently, led by billionaire Elon Musk, the Social Security Administration was targeted for major restructuring. That included the elimination of 7,000 jobs, the downsizing or closure of field offices and a proposed cut to national phone services — a move that has since been reversed.

At the same time, the SSA is under pressure to act. Without policy changes, it won’t be able to pay full retirement benefits by 2035, according to the 2024 Social Security and Medicare trustees report. If nothing changes, recipients will only receive about 83% of their benefits.

“If anything happens to Social Security, it would really impact me,” Timothy Black, a 52-year-old Democrat from San Diego, told ClickOnDetroit. Black, who receives Social Security Disability Insurance to help manage a chronic illness, says he’s concerned about both his retirement and disability payments.

“If SSDI doesn’t keep up with the cost of living, my medical expenses are only going to grow and I could end up homeless,” he said.

Republican voter, Linda Seck, a 78-year-old retiree from Saline Township, Michigan, told ClickOnDetroit she’s confident the program will last.

“When I was in college, financial planners were telling us not to depend on Social Security,” she said. “But here we are more than 50 years later and it’s still going.”

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

How to shore up your retirement savings

Fifty years ago, financial planners may have warned people like Seck not to count on Social Security — and they may have had a point. The program was never intended to be the only source of retirement income. Instead, it was designed to complement personal savings, investments and, when available, pensions.

Whether you’re worried Social Security or not, it still makes sense to take a well-rounded approach to retirement planning. Just like you wouldn’t put all your money into a single stock, you shouldn’t rely on Social Security alone.

Maximize your contributions to retirement accounts: If you have access to a 401(k), try to contribute as much as possible — especially if your employer offers a match. You can also open an individual retirement account (IRA).

A traditional IRA lets you contribute pre-tax dollars and pay taxes when you withdraw in retirement. A Roth IR A uses after-tax dollars but allows tax-free withdrawals after age 59 ½. In both cases, your money grows tax-free. If you’re 50 or older, you can make catch-up contributions too.

Diversify your investments: Don’t get too focused on one type of asset. A mix of stocks, bonds, real estate and other investments can help reduce risk — though no strategy is guaranteed. Ideally, you’ll want investments that don’t all move in the same direction, so a loss in one area might be balanced by gains in another.

Get creative: If you’re still concerned you won’t have enough to retire comfortably, consider picking up a side gig or part-time work. But if you’re collecting Social Security before full retirement age, there’s an earnings limit to keep in mind. In 2025, that limit is $23,400.

You could also explore passive income streams, like renting out a basement apartment or getting a roommate. There are plenty of ways to boost your retirement savings, so no matter what happens — or doesn’t happen — with Social Security, you’ll be better prepared for the years ahead.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Sarah and her husband rent a place in Los Angeles and are expecting their first child. But she called into The Ramsey Show because of a tricky situation involving her mother-in-law, homeownership and the IRS — one that caught host Dave Ramsey off guard.

Why? Because this caller’s situation includes $1 million in debt and potentially deceiving the IRS.

“Sarah, there’s just so much going on here that you’re not talking about or you don’t know,” Ramsey said in a clip posted July 12. “And it’s really, really scary. There’s a line of crazy running through this conversation.”

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Here’s what was revealed during the exchange.

A questionable situation

Sarah’s mother-in-law currently lives with the couple in their rental home. However, Sarah says her grandmother-in-law has offered to buy her mother-in-law a house in Sarah and her husband’s names so her mother-in-law “is not docked by her unpaid debts from the IRS” — and the three would continue to live together in the new house.

“She has a lot of unpaid debts and so grandma is trying to take care of her by providing a home,” Sarah said.

Her mother-in-law, 55, is going through a divorce and lost her job in September after a corporate restructuring. Right now she’s making DoorDash deliveries to bring in some extra cash.

She’s also apparently $1 million in debt.

When Ramsey asks why her mother-in-law is almost $1 million in debt, Sarah responded: “I don’t ask questions.”

Sarah says she adores her mother-in-law, but wants to know if this setup would be a wise decision and, if so, what they need to “have on paper.”

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

Why this is unethical

Ramsey answered clearly: “I would not do this.”

He said, by doing so, “you are tying yourself to people you don’t ask questions about, permanently, and you are taking away her reasons for getting back on her own feet. This is not good. It is not healthy.”

He said Sarah’s mother-in-law needs to recover from the grief that comes from ending a marriage and experience “what’s known as a life — not hiding at her son’s house from reality.”

Secondly, “the whole reason to do this is to deceive,” he said.

“Your grandmother-in-law is teaming up with her daughter and using you guys to deceive the people that she owes,” Ramsey said. “This is deception and I’m not going to participate in that. It’s a lack of integrity. It’s unethical.”

Ramsey guessed the debt belongs to the mother-in-law’s ex-husband — perhaps unpaid IRS debt from a failed business venture. It’s possible the mother-in-law had nothing to do with it, in which case she could potentially get rid of the debt using innocent spouse relief.

Innocent spouse relief can “relieve you from paying additional taxes if your spouse understated taxes due on your joint tax return and you didn’t know about the errors,” according to the IRS.

“I got a feeling she didn’t buy purses to get to a million dollars [in debt],” Ramsey said.

If the mother-in-law qualifies for relief and grandma wants to give her daughter some money to clean up any debt that’s left over, “I got a feeling it’s not going to be that much,” Ramsey said.

He also believes this is a better option than buying a house under deceitful circumstances.

“That would be the ethical thing,” he said. “Try to settle it.”

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• You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how
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• Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead

Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Imagine a situation where a couple, whose house was paid off, decided to downsize and — after paying for a new, smaller house — has about $50,000 left over.

Deborah’s husband, Pete, wants to pay off their $50,000 credit card debt, but Deborah wants to put the money in a high-interest savings account (HISA). Both are working, have benefits and have 401(k)s with employer matching.

However, because they put their extra money into paying down their first house, they don’t have other savings. Other than their credit card debt, they don’t have other high-interest debt, don’t have kids and don’t anticipate making any major purchases in the next few years.

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The pros and cons of each approach

Many financial planners would advise paying off the debt. “If you have credit card debt that is increasing and you’re paying high interest, you definitely want to pay that off first,” Stuart Boxenbaum, president of Statewide Financial Group, told CBS News.

Personal finance expert Dave Ramsey would agree — for the most part. He recommends what he calls the 7 Baby Steps, which starts by saving $1,000 in a ‘starter’ emergency fund and then paying off non-housing debt.

From there, he recommends building a more substantial emergency fund (saving three to six months of expenses) and then investing 15% of your income for retirement.

In the case of Deborah and Pete, the advantage of paying off their credit card debt could mean saving thousands of dollars in interest.

Consider that the average credit card interest rate in the U.S. is 24.33%, according to LendingTree. On a debt of $50,000, interest starts adding up fast if you’re only making minimum payments.

The downside? They’d temporarily reduce liquidity. If they put the money in an interest-bearing account, they’d have full access to that cash if they need it.

However, the rate on a high-interest savings account is currently around 4%, so even doing some simple math shows that the annual percentage yield on a HISA won’t outpace credit card interest.

Rod Griffin, senior director of public education and advocacy at Experian, told CNET that “paying off debt and saving money doesn’t have to be all or nothing,” and that consumers “can and should do both.”

That may mean building an emergency fund and paying down debt (or following Ramsey’s approach with a ‘starter’ emergency fund, paying off high-interest debt and then building a larger emergency fund).

A HISA can make that emergency fund work for you. “For example, instead of having your emergency fund sitting idle and earning next to nothing, a high-yield savings account can help you earn a real return on your money while still keeping it readily available for unexpected expenses,” Kristen Beckstead, vice-president and financial planner at First Horizon Advisors, told CBS News.

Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it

Couples need to work together on their finances

Deborah and Pete may decide to pay off the full $50,000 balance to stop the high-interest bleeding. Or they could reach a middle ground.

Since they don’t have an emergency fund, they may want to put a portion of that money aside — enough to cover three to six months of expenses — and then pay down as much of the debt as possible with the remaining money.

More importantly, they may want to examine their financial plan and how they’re managing their finances as a couple. It can help to do this with a financial planner, who can provide them with various options and be an impartial third-party to help them navigate what can sometimes be difficult conversations.

“Money is the number one issue married couples fight about, and it’s the second-leading cause of divorce, behind infidelity,” says finance expert Rachel Cruze in a blog for Ramsey Solutions.

After all, people come into a marriage with different money mindsets — the attitudes and beliefs we each hold about money and how that influences the way we manage our finances. But, once you’re married, you need to manage financial matters as a team.

To do this, Cruze recommends keeping a joint bank account, since “separating the money and splitting the bills is a bad idea that only leads to more money and relationship problems down the road.” She says couples should also discuss lifestyle choices together, recognize differences in personality and keep purchases out in the open.

Working together and communicating isn’t easy, especially when each partner has different money mindsets, but it can help couples like Deborah and Pete find a solution that works for both partners.

What to read next

• You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how
• Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
• Accredited investors can now buy into this $22 trillion asset class once reserved for elites – and become the landlord of Walmart, Whole Foods or Kroger without lifting a finger. Here’s how
• Rich, young Americans are ditching the stormy stock market — here are the alternative assets they’re banking on instead

Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.