On a recent episode of “The Ramsey Show,” a caller named Michael from Boston shared that he's about to lose his $160,000-a-year job in product management and a 20% annual bonus. His company is letting him go at the end of the year. Normally, this kind of news would send a household into panic mode, especially in today’s economy.
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Mass layoffs have been making headlines across the U.S. Amazon (NASDAQ:AMZN), United Parcel Service (NYSE:UPS) and Intel (NASDAQ:INTC) are slashing tens of thousands of jobs. UPS alone has cut 48,000 jobs in 2025. Amazon is following with 30,000, its largest layoff ever. Other big names like Intel, Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META) and Salesforce (NYSE:CRM) have also made or will be making significant cuts.
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But Michael’s story is different. Despite being laid off, he’s not in a financial crisis; thanks to some smart decisions he and his wife made ahead of time.
“My wife and I have about $100,000 in cash right now,” he told hosts Jade Warshaw and Rachel Cruze. His wife makes $110,000 per year, and he's getting a severance package that pays his full salary through next October.
“You’re in a really good position,” Warshaw told him.
The Plan: Stay Calm And Be Smart
Michael said he wanted advice on what to do with the $100,000 in savings during “uncertain times.” Cruze immediately recommended paying off their $10,000 car loan.
“I would pay that off tonight,” she said. That would leave them debt-free aside from their mortgage.
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After setting up a detailed budget, they advised him to build a six-month emergency fund—likely around $60,000—leaving him with about $30,000 extra.
He asked whether to invest that money or keep it liquid. Cruze and Warshaw agreed that waiting until he lands a new job could make sense. If he finds something soon, he'd be earning income on top of severance.
“There's part of me that might wait until you land that next job,” Warshaw said. “Then you’d have something to do with this $30,000. You could really do some major damage on your mortgage.”
Debt-Free Living Offers Peace
Michael's mortgage sits at $260,000 with a 2.85% interest rate. Still, Warshaw pushed back on the idea that low-interest debt should just stick around.
“Debt is risk no matter how you slice it,” she said. “Even if the interest rate is lower, it can be more dangerous because you're more likely to keep it around.”
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Cruze acknowledged that paying off a mortgage might not be the best mathematical move, but insisted that behavior and peace of mind matter more.
“Debt is debt. The borrower is slave to the lender,” she said. “There’s something freeing about being debt-free.”
Despite being laid off, Michael’s strong financial cushion means he’s not forced into a rushed job search or major lifestyle cutbacks.
“This isn't a crisis,” Cruze said. “It's just an inconvenience.”
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