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Dave Says

Clean 'em Out, and Move Ahead!

 

 

Dear Dave,

 

I’m 22, and I just recently graduated from college. I’m lucky enough to be walking into a job making $60,000 a year with a company I interned with during school, and I’ll be living with parents for the next few months. I have about $50,000 in student loan debt, but I also have $25,000 in savings, along with an E-Trade account with two single stocks that was given to me a couple of years ago. Those stocks are now worth about $13,000 combined. Should I sell the stocks to help pay off debt, or put the money from their sale into mutual funds? 

 

Tyler

 

 

Dear Tyler,

 

In situations like yours, I teach folks to pull out any money they have that’s not in retirement plans, and use it to pay off debt. The shortest distance between where you are now, and wealth, isn’t a couple of stocks in an E-Trade account. The shortest distance between you and wealth is becoming debt-free and taking control of your largest wealth-building tool—your income.

 

If I’m you, I’m going to clean out everything, including my savings—down to $1,000—and throw it at debt. After that, I’m living on a strict budget with no unnecessary spending until that debt is all gone. Man, with the money you’ll make right out of college you can be debt-free, and on your way to building a fully-funded emergency fund and wealth, so fast it’ll make your head spin.

 

Get this done, Tyler. Today!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


A Calling or a Job?

 

 

Dear Dave,

 

When it comes to your career and profession, how can you tell if you’ve truly found your calling in life?

 

Tony

 

 

Dear Tony,

 

I don’t think it’s common for most folks to feel like they’ve experienced some kind of grand revelation, and suddenly they know what they’re supposed to do with their lives. Personally, I believe this kind of thing usually starts out as an activity or idea connected to something they enjoy and want others to experience. Often, that can grow into a job, and then maybe into a career—or even a business.

 

I think it takes a lot of time, reflection, insight, and self-evaluation before anything can be termed a calling. I know this is true in some cases, because that’s how it happened with me. I can’t honestly tell you that when I first started on radio, or began formally teaching and writing I knew it was God’s plan for my life. I knew early on I was drawn to it, and felt there was a need for it, but it took a while for me to understand and accept that it was what I was really meant to do.

 

I hope this helps a little bit, Tony. Just be honest with yourself, think about it, and pray about it a lot, too. God wants what’s best for you, so make sure you include Him in everything. It worked for me. I’ve been doing what I do for nearly three decades now, and I still love it. I’m convinced that it is God’s calling on my life.

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Being on the Same Page is Vital to Your Family's Future

 

 

Dear Dave,

 

My wife and I are in our 20s, and together we make about $80,000 a year. Our first baby is due in early 2022, so being debt-free has become a top priority in my mind. Right now, we have two cars. The one I drive is paid off and has a lot of miles on it, but it’s in really good shape. We still owe $30,000 on the other one, and the rest of our debt is about $90,000 in student loans. My wife puts 40,000 miles a year on the other car traveling for work. I talked to her the other day about us moving down a little in car, but she’s particular about what she drives. I even found out she has her eye on a newer vehicle that costs about $48,000. I don’t know what to do. Can you help?  

 

Zach

 

 

Dear Zach,

 

Okay, let’s start slow. I’m glad you’ve seen the wisdom in getting control of your money and getting out of debt. That’s the first step toward financial peace.

Now, where the car thing is concerned, there’s not a chance in the world I’d do this. And honestly, I don’t give a crap what your wife is particular about. You guys are broke! You’re up to your eyeballs in debt, and now she’s talking about buying a $48,000 car—when you still owe $30,000 on one—then putting 40,000 miles a year on it and destroying its value quicker than you can say “fast.”

 

This whole idea and attitude is dumber than a rock. Absolutely not! You may have seen the light where your finances are concerned, but it sounds like your wife is still in the dark and needs to grow up some. You two should have a long, serious talk about things, and get on the same page financially—especially with a baby on the way. Your family’s future depends on it.

 

I hope I wasn’t unclear.

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


More Than Any Amount of Money

 

Dear Dave,

 

My husband and I are both 29, and we have good jobs that allow us to bring home $100,000 a year combined. Recently, we began talking about starting a family. We live on a budget, but we still have about $15,000 in credit card debt and student loans we’re working hard to pay off. Do you think couples should wait until they are debt-free to have children?

 

Missy

 

 

Dear Missy,

 

You and your husband are chipping away at your debt, and that’s a good thing. It sounds like you two are determined to get it paid off and take control of your finances. You’re also making pretty good money, so keep up the good work!

 

Ok, so the truth is kids can be expensive. From medical costs and diapers, to childcare and beyond, it costs money to raise a family. But here’s the thing: If you let money alone, or the perfect financial situation, determine whether you have kids or not, you may never have them. Now, would it be easier from a financial standpoint only to wait on having kids until you’re debt-free and there’s a huge pile of cash in the bank? Sure, it would. But children are worth more than any amount of money. If you love each other and want to be parents, and you’re mature adults in every other area, don’t let this debt stop you. 

 

A child isn’t going to derail your journey to financial peace. Having kids might cause you to press pause for a while on some financial matters, or slow your pace a little bit, but as long as you both stay focused and determined to manage your money wisely, chances are things will work out fine.

 

Just don’t make the mistake lots of parents do—especially first-time parents. Many of them think they have to run out and buy a new, "safer" car, spend a fortune on a fancy crib, or buy all things baby from some overpriced boutique. Do you get what I’m saying, Missy? Why buy a brand-new, $400 stroller, when a friend or relative has a perfectly good, barely used one they’re willing to give you?

 

It’s easy to get carried away spending for a baby. But children will be just fine as long as they have food, clothing, shelter—and most importantly—loving, caring parents. God bless you two!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


It'll Work Out Better In the Long Run

 

Dear Dave,

 

My wife and I are having a financial disagreement. I would like to go ahead and fully fund our Roth IRAs, even though we have about $10,000 in car loan debt. She, on the other hand, thinks we should pay off the debt first. We can probably have either one completed by the end of the year. What do you think we should do?

 

Mark

 

 

Dear Mark,

 

I’ve got to go along with your wife on this one. I’m glad you two are having money discussions, and working toward making decisions together, but you’ll never get control of your finances until you rid yourself of the mindset that debt is okay. Once you lose that idea, you’ll begin to understand missing a year of funding your Roth IRAs isn’t going to kill you. It’s also not going to prevent you from becoming wealthy and living like no one else when it’s time to start thinking about retirement.

 

If you stay in the mindset that having debt is okay, or that you’re going to let it hang around, eventually it will really mess you up financially. Winning with money is more about behavior than math. Don’t get me wrong, you need to crunch the numbers and be mindful of them, but all the mathematical components are nothing but theory if the behavior doesn’t kick in.

 

So yeah, I’m siding with your wife on this one. Just follow the Baby Steps plan. Have all your debt paid off, except for your home, and an emergency fund of three to six months of expenses saved and set aside before you start any long-term investing. A lot of folks will tell you my way isn’t mathematically correct, but it will work better in the long run—for your money, your marriage, and in other areas of your life!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Are You Willing To Do What It Takes?

 

Dear Dave,

 

I owe $17,000 on my car, and it is my largest and only debt. I think I can have it paid off in two years, because I bring home about $2,800 a month and my monthly expenses are $2,100. I also just got a $2,000 tax refund. Should I pay it off as fast as possible, or sell the car?

 

Justice

 

 

Dear Justice,

 

If you think you can have the car paid off in two years or less, that’s what I’d do. The question is this: Are you willing to do what it’ll take to make that happen? It’s going to mean lots of discipline and hard work on your part, in addition to living on a really strict budget. But in return, you’ll have that car loan off your back for good.

 

You don’t want the debt on all your vehicles to be more than half of your annual income. If that’s the case, it means you have too much money tied up in things that are going down in value. If you bring home $2,800 a month, you probably make around $40,000 a year. Technically, your car loan is under half in this scenario, but it’s still pretty expensive. I’d get serious about getting out of debt, and pay the thing off!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


You May Already Have Some

 

Dear Dave,

 

I started listening to your radio show recently, and I heard you say people should have 10 to 12 times their yearly income in life insurance. I’m single, with no plans to get married. Plus, I don’t have any children. Do I still need a big life insurance policy like that?

 

Kris

 

 

Dear Kris,

 

I do recommend most people, if they work outside the home and are married—especially if they have kids—have 10 to 12 times their annual income in a good, level term life insurance policy. You only need life insurance to take care of things you leave behind when you die. So, when it comes to this kind of coverage, just think about anyone who might be left in a bad financial situation if you died. Your family could never replace you, but in most cases, they would need to replace your income.

 

Someone in your shoes might not need a traditional life insurance policy, especially if you’ve been smart with your money and saved up a pile of cash. A simple, inexpensive burial policy might work. There’s also a good chance you already have a small amount of life insurance coverage built into an existing health insurance policy or bank account.

 

Good question, Kris. I’m glad you’re looking for answers!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


It's Just Not Worth It

 

Dear Dave,

 

Do you think I should get a new hybrid car to save money on gas? A lot of my friends have done this, and with the rise in gas and oil prices lately, they’re telling me I should, too. According to them, I’ll save a ton of money, especially since I have a bigger car and a longer drive to work. What are your thoughts?

 

Daneen

 

 

Dear Daneen,

 

I get lots of questions about these kinds of scenarios, and how it plays into people’s budgets. Many folks wonder if it would be better to go out and get a new vehicle with better gas mileage. Well, do you really want to lose more money?

 

Let's say you currently drive a vehicle worth $10,000 that gets 15 miles per gallon. There's a $25,000 hybrid you're thinking about buying that gets 25 miles per gallon. That's a $15,000 price difference just to get 10 more miles a gallon. If you drive 100 miles a week, that's about a $10 difference a week. That would be about $40 extra you're spending a month in gas if you stuck with the current car. A monthly car payment is a whole lot more than that! In short, the math doesn’t work. You'd have to drive to the moon and back to make it worthwhile.

 

There are a lot smarter things you can do to cut down on your fuel bill. Have you thought about trading for something smaller? If you’re driving a gas guzzler, trade it in on another car worth no more than your current car's selling price. This means better fuel efficiency without a car payment. Carpooling is an option, too, even if you split the driving just a few days a week.

 

If you want to get a little more radical with the money-saving ideas, you could think about moving closer to work. Spend some time doing the calculations and looking at the specifics to see if it makes sense in your case. Finally, and this may be a last ditch effort, you could consider changing jobs. No one’s forcing you to work where you do, especially if you’re spending a lot of time and money on the road just getting to and from your job. If you’re really spending a ridiculous amount on gas each month, it might even be time to look into ideas you may have once had to start your own business.

 

But don't use better gas mileage, or bad advice from your friends, as a rationalization for buying a new car. It’s just not worth it!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


Limit The Potential For Damage

 

Dear Dave,

 

My husband started working at a new company about a year ago. As part of his sign on, they gave him $5,000 in company stock. The stock has nearly doubled in value since then, and we were wondering if we should buy more, considering how well it has done.

 

Cathi

 

 

Dear Cathi,

 

I totally get why you two might be excited over a stock that doubled in value over the course of a year. But what you’re talking about doing right now is a very risky proposition. The truth is any stock that doubles in value over the course of just one year is highly volatile. It’s unusual for stocks to do things like that, and it also means it could go down just as fast—or even faster.

 

I don’t know where you and your husband are in your overall financial situation, but I recommend people become debt-free except for their homes, and have an emergency fund of three to six months of expenses saved up before investing. Once you reach that point, I strongly advise to begin putting 15 percent of your income toward retirement before you start any outside investing.

 

Don’t get me wrong, I don’t mind a little selective and educated dabbing here and there once the basics are taken care of first. However, I’d never recommend putting more than 10 percent of your nest egg into a single stock. The reason? If the single stock tanks and you lose it all, then your loss is only a blip on your financial radar.

 

Of course, it would be fantastic if this single stock went through the roof and you two made a ton of money. Just make sure you limit the potential for damage in this kind of scenario by limiting your exposure.

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Put a Little More Thought Into It

 

Dear Dave,

 

I don’t like admitting this, but I absolutely hate my job. Last year I almost cashed out part of my 401(k) to start my own business or open a franchise, and doing something like this is still on my mind. Considering how I feel, do you think this would be a good idea?

 

Kurt

 

 

Dear Kurt,

In your current state of mind, this entire idea is a trap. Don’t misunderstand, I love the idea of someone living their dream and owning their own business. But you just mentioned starting your own business in same breath with opening some sort of franchise. That tells me you don’t really know what you want to do.

 

Have you ever heard someone say they’re “going all in”? When you’re playing cards, that means you’re about to bet everything on a single hand. But here’s the deal, it’s never smart to go all in when it comes to small business. That’s a good way to turn a dream into a nightmare.

 

I’m urging you to really think about this before you take action. You didn’t mention anything about your financial situation, other than you have a 401(k). That’s a good thing, but if it’s all you have—and you don’t have any other savings set aside—you could be in real trouble. If you decided to leave your job, and your idea for your own business doesn’t pan out, you’ve lost a chunk of your retirement savings. It’s gone for good. Bankruptcy also becomes a real possibility. Opening a business just because you don’t like your current job, or you’re angry at “the man,” is a bad idea. You need to find something you truly love doing, because to have any chance of success you’ll have to live and breathe that business day and night, seven days a week.

 

Don’t make any rash decisions about your current job right now. If you really want to start your own business, begin by doing a lot of research, saving as much money as you can, and thinking about things you could do for a living that would make you smile every day. Once you figure that out, the next step is devising a plan that will allow you to open a business without putting your entire financial world in danger. In other words, how can you start small with the money you have, instead of damaging your retirement funds or taking out a loan?

 

It’s not an either/or proposition, Kurt. You don’t have to risk it all to get away from a job you hate and into one you love!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Don't Embrace the Wrong Things

 

Dear Dave,

 

Your plan has been a lifesaver for us. Why do you think some people are unwilling to listen to good advice, and make changes in their finances?

 

Tammi

 

 

Dear Tammi,

 

Thank you so much for all the kind words. I’m really proud of you two for putting in the effort and hard work that goes along changing your financial behaviors and gaining control of your money.

 

I think there are several reasons why some folks resist making changes in their lives, even when those changes would make things a whole lot better and easier for them. One of those things is often denial.

 

My dad used to tell me 90 percent of solving a problem is realizing and admitting a problem exists. I’m convinced that one of the major factors keeping people from winning with money is they don’t realize they even have a problem. If you are apathetic because you think things like debt and living paycheck-to-paycheck are okay or just the way things are, you’ll be unwilling—or even afraid—to make the big changes necessary to achieve big results. Debt is so ingrained into our culture that most Americans can’t envision a car without a payment, or college without student loans. We’ve been sold on the idea of debt so aggressively that most folks don’t believe life without a pile of payments is possible. 

 

Also, change is painful. Most people won’t change until the pain of where they are exceeds the pain of change. No matter who you are, where you’re at right now financially is, in large part, a sum total of the decisions you’ve made to this point. If you don’t like where you are, you have to acknowledge the fact that things need to change—you need to change.

 

Finally, there’s an element of ignorance involved. Don’t get me wrong, I don’t mean being dumb or stupid. What I’m talking about is a simple lack of good, solid information. Anyone can learn things, if they’ll just admit they don’t have all the answers and set their minds to studying and educating themselves. If you’re not careful, what you don’t know about money will make you broke and keep you broke!

 

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


Do Some of All Three, and Enjoy the Ride

 

Dear Dave,

 

I was talking to a friend the other day, and I couldn’t remember what you said about the three good uses for money and why each is important. Would you go over them again?

 

Albert

 

 

Dear Albert,

 

I’ve been doing this for a lot of years, and after all that time studying finance and teaching people about money, I can still find only three good uses for money—spending, saving, and giving. You should be doing all three while you’re working your way out of debt and towards wealth, and after you become wealthy. 

 

The kid in us likes the spending part of this equation, because it’s so much fun. The problem with most people is they can’t really afford the fun they have. You should have some fun no matter where you are on the financial scale, but it should be inexpensive fun in the beginning. Then, the fun can get bigger, better, and more frequent once you’re out of debt and building wealth.

 

The grown-up part of us likes investing and saving, because that’s what can prepare you for retirement and make you wealthy. After a while, though, investing can feel a little bit like Monopoly. You can be up, or you can be down. Sometimes the market fluctuates, but a mature investor will ride out the waves and stay in for the long-term. If you have quality investments with long track records of success, they will come back up. Start investing 15% of your income for retirement once you’ve paid off all debt except for your home and you have three to six months of expenses saved for an emergency fund.

 

The most mature part of you will meet the kid inside when you give. Giving is the most fun you’ll ever have with money. Every financially, mentally, and spiritually healthy person I’ve ever met has been turned on by giving. I’ve met and talked with thousands of millionaires in my career, and one thing all the healthy ones have in common is a love of giving.

 

Someone who never has fun with money misses the point. Someone who never saves or invests money will never have any. And someone who never gives is holding on too tight. Do some of each, and enjoy the ride!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


First, Define Long Term

Dear Dave,

 

What is your advice when it comes to investing a one-time, lump sum of $4,000 for a long period of time? I recently received an inheritance from an uncle who passed away, and I want to make the money work for me. I’m 33 and my home is paid for, plus I have no debt and an emergency fund of six months of expenses. I am also maxing out my 401(k) at work. Thank you for your advice.

 

Pat

 

Dear Pat,

 

I’m sorry to hear about your uncle, but I’m sure he was proud of the responsible young man you’ve become. You’ve made some very mature decisions where your finances are concerned, and as a result you’re at a great spot in life.

 

When it comes to investing, I consider a “long period of time” to be 10 years or more. If this is the case with you, I’d suggest a good mutual fund with a solid track record of between 15 and 20 years.

 

I know some folks like to take chances and play single stocks on a one-time investment like this, but I don’t think that’s a good idea. Single stocks just don’t consistently generate the kinds of returns a good mutual fund will over time.

 

— Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


There Are Other Ways

Dear Dave,

 

I really don’t have any established credit, because I’ve never taken out a loan or had a credit card. What will happen when I’m ready to get a mortgage loan and buy a home?

 

Jillian

 

Dear Jillian,

 

There are basically two ways to be in a position to get a home loan. One is to have credit at lots of places and a huge FICO score. This is kind of dumb when you really think about it, but it will get you a mortgage loan almost instantly.

 

When you have no credit, a lender has to do what’s called a manual underwriting. It’s something lots of banks did back in the day, when they actually used common sense when it came to making loans.

 

Fortunately, a few places will still work with you in this manner. They take a look at your work history to see if you have a stable job and a good income. They want proof you pay your bills on time, too. This can be as simple as showing them several utility bills, rent statements, and other receipts. They’re basically looking for a long history of proof that you honor your financial commitments.

 

Remember, buying a house with cash is always the best way to own a home. But I don’t beat people up over having a mortgage, as long as it’s on a 15-year, fixed rate note. Do your very best to save up for a down payment of at least 20 percent, too. That way, you’ll avoid the added expense of PMI (private mortgage insurance).

 

Great question, Jillian!

 

— Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Don't Let Budgeting Myths Sabotage Your Finances

 

 

Dear Dave,

 

I made a resolution to start following your plan in 2021. I talked to my parents about this, and while they like some parts of your teaching, they don’t think living on a budget is necessary if you make good money. They also said budgeting is extremely difficult. Are they right?

 

Jensen

 

 

Dear Jensen,

 

For whatever reason, I’m afraid your parents are way off base on this one. A lot of people trash talk the idea of budgeting, and make up all kinds of excuses for not living on one. The truth is a written, monthly budget is essential when it comes to beating debt and winning with money—period. It’s the map you need to get where you want to go in your financial journey.

 

There are lots of myths, and just some bad information, out there where living on a budget is concerned. Making a budget isn’t rocket science. If you can do basic math, you can create a budget. Your income minus your outgo needs to equal zero. That’s it! You might spend a couple of hours tallying all your expenses when you first start, but the process soon becomes faster and easier. All it takes is a little practice.

 

If you think doing a budget is only for people who have trouble making ends meet, think again. My wife and I have lived by a written, monthly budget every single month for about 30 years. It doesn’t matter whether you’re a multi-millionaire, or if you have just $100 to your name, knowing exactly how much money you have—and where it’s going—is an essential part of managing your finances accurately and successfully.

 

Believe me, I hear dozens of other excuses, too. You’d be amazed at how many people don’t make a budget every month because they think it’s “boring.” Others claim they can do their budgets in their heads. I don’t think so! For a budget to really work, it needs to be something you can track down to the last penny. And if you’re married and saying you can do a monthly budget in your head, that means only one of you is involved in the decision making. That’s a recipe for disaster in your finances and your relationship.

 

A budget represents your financial game plan for the upcoming month and years ahead. As Benjamin Franklin said, “If you fail to plan, you are planning to fail.”

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


Only You Can Make It Happen

Dear Dave,

 

I’ve got so many things I want to address and change about my life, both personally and professionally, in the coming year. Do you have any advice or practices for helping people be successful and achieve their goals?

 

Tim

 

Dear Tim,

 

Goals are dreams, but you can’t stop with just dreaming. Examining your goals inside and out, and by thoughtfully constructing small, achievable steps toward them is the key to creating change in your life. Remember, too, that it’s your responsibility—not someone else’s—to fix things in your life. If you’re waiting for someone or something else to make things better, you’re going to be disappointed.

 

When it comes to setting and achieving goals, be specific about what you want to achieve. Vague, unspecified ideas will only cause you to feel overwhelmed, and this will likely lead to you giving up. Also, make your goals measurable. If you want to lose weight, don't simply write down "lose weight" as a goal. How much weight do you want to lose? How many pounds would you have to lose per week in order to see the desired result in a specified amount of time?

 

This one may sound silly, but are the goals you have in mind your goals? If a spouse or friend sets goals for you, you're probably not going to succeed. Creating a goal, and taking ownership of it, will give you more incentive to meet your goal. Setting a time frame will help you develop more realistic goals, too. And last, always put your goals in writing. Write them down, and review them often. This will provide you with added motivation to make your goals a reality.

 

Successful people examine and reassess their lives on a regular basis. When they realize changes need to be made, they start living intentionally, in writing, on paper, and on purpose!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


Patience, Determination...and Time

Dear Dave,

 

One of my resolutions this year was to start living on a budget, and gain control of my money. I never realized how easy it would be to get discouraged early on. Can you give me some encouragement to help make my financial resolutions stick in 2021?

 

Collin

 

Dear Collin,

 

The secret to making a goal into a reality is getting started. It’s really that simple. You also have to be realistic and accept the fact that nothing—especially things you’ve never done before—works out perfectly the first time around. That leads to the next step, which is patience. Most people think about losing 20 pounds, and immediately feel it needs to happen in the next month or so. It doesn't. And mostly likely, it won’t. Like almost everything else worth doing, it’s something that requires sacrifice and focus each day over an extended period of time. Crash courses are usually painful and rarely work out well. But once you've done something a few times, it becomes an easier and easier part of your daily routine. Pretty soon, it’s not a chore or something you’re afraid of.

 

Making a budget and gaining control of your finances works the same way. When you first create a money plan, it probably won't work out exactly as you hoped. That’s okay. It will barely work the second month, but it won’t be as scary, because you’ve already done it once. By the third month, you’ll have a much better feel for it, and your stress levels will go way down because you already know the basics. It just takes determination, patience, and intensity to get through the rough patches that go along with starting anything new.

 

A new year is just around the corner, Collin. Don’t fall into the same old trap. Give yourself a little grace, but keep your eyes on the prize. Start preparing yourself now. You’ve got plenty of time to begin laying out a plan, and have a solid budget ready when January 1st arrives. It may feel like things are beginning slowly, but you can make this happen if you’ll just stick with it!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Don't Let Money Fights Steal Your Joy

Dear Dave,

 

My husband and I usually have a few disagreements around the holidays when it comes to Christmas spending. Do you have any advice for eliminating this kind of thing, and making the financial side of Christmas a little less stressful?

 

Kellie

 

Dear Kellie,

 

I imagine every couple has a few disagreements over Christmas spending. The trick is in how you handle them, and come to a compromise you each feel is fair, smart, and affordable.  

 

One of the keys is to start talking before you start shopping. Being on the same page—and creating a plan and sticking to it—are great ways to bring peace and togetherness into the picture. Honestly, Christmas spending can be part of your monthly cash flow plan the whole year. Get the picture? I’m talking about living on a written, monthly budget. You know Christmas is December 25th every, single, year, so why not set aside a little each month leading up to the holidays?

 

If you haven’t planned ahead, now is a great time to become a unified team. Huddle up, not only to talk about Christmas priorities, but devise a game plan moving forward so that this doesn’t happen again next year. Together, figure all your regular monthly income and expenses into a budget. If you’ve saved anything at all for Christmas, include that, as well. We’ve all got necessities, so take of those first. Then, make a general list of everything you’d like to spend money on for Christmas—I’m talking about the things we often overlook like food, cards, party expenses, and decorations. Now, make a gift list.

Write a dollar amount beside each name or expense on your lists, and if the grand total is the same as—or less than—your Christmas budget total, you’re ready to roll!

 

If you can’t agree, or the numbers don’t work, run through things again. This doesn’t mean to repeat your positions until you get what you want. It means both of you acting like mature, responsible adults, finding some middle ground, and making sacrifices. If you really want to show your commitment, you and your spouse can sign your new budget. Signing your name is a simple, psychological signal that means you’re committed to your agreement. Then, post it somewhere you’ll both see it regularly.

 

Give it a try, Kellie. It just might help reinforce your commitment to the budget—and each other—when the shopping frenzy sets in!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


Will My Mother-In-Law Be Okay?

Dear Dave,

 

My mother-in-law is 60. She works hard and has no debt, but she also has no savings or retirement accounts. However, she owns a couple of paid-for rental properties that are worth about $350,000 each, and her home is worth $700,000. What can I do to help her plan for the future? 

 

Paul

 

 

Dear Paul,

 

The best plan would be to first see if she’s already got a plan. I understand you’re worried about her not having any savings or retirement. That makes you a good son-in-law. But it sounds to me like she’s got the makings of a pretty good retirement situation lined up, even if she didn’t go the traditional route to get there. You just told me she’s sitting on nearly $1.5 million in paid-for real estate. Dude, she’s a millionaire!

 

If the time comes where she decides she doesn’t like landlording anymore or just wants to retire, she can always sell the rental properties, invest that big pile of cash in mutual funds, and live off the income. I’ve got a feeling this lady isn’t going to be starving or depending on Social Insecurity.

 

If you’re concerned about things, just sit down with her and let her know. Ask her if she needs any help with her money situation and plans for retirement. If she doesn’t want to talk about it right now, that’s fine, but making the offer shows you care. And, having a good, strong game plan means fewer worries!

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 


Jump In!

Dear Dave,

 

I recently received my master’s degree in finance, and for the last four years I’ve had a job as a social worker. I love my job and have a decent income, but I know I could make more money and come closer to reaching my full potential in the finance industry. I’m on Baby Step 2, and I have lots of debt. On top of this, my dad lives with me and needs transplant surgery. I’ll have to take six weeks off work when he has this done, and my current job has always been very supportive of his healthcare needs. Should I wait until after the procedure to look for a job in the finance field? Will the fact that I won’t be a brand new graduate at that point make finding something difficult?   

 

Rachel

 

Dear Rachel,

 

Not at all. You can seek employment in anything you want anytime you want. But I think you’re putting the cart before the horse a little bit here. It sounds like you’re assuming you won’t be able to find an employer in the finance world that will understand your situation and work with you where you dad is concerned.

 

If you were interviewing at my company, and we determined you were an amazing person and a perfect fit for the job, we’d take a look at things and do what we could to work things out to where we could bring you on and help you through the situation. So, in my mind, it doesn’t reflect badly on you at all to be seeking a better job now.

 

Now, if you found yourself in an interview where the company reeked of that hardcore, corporate, no-days-off-no-matter-what crap, well, you obviously wouldn’t take the job. Always remember that in a job interview you’re interviewing them just as much as they’re interviewing you. You have to decide if they’re a good fit for you as much as they need to see if you’re the right person for them.

 

Honestly? It sounds to me a little like you’re just trying to stay in your comfort zone, kiddo. I think you need to go swimming. Jump in! The water’s fine.

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


Try To Help Him, But Move Slowly

Dear Dave,

 

My boyfriend lives in a different state, and I’m planning to move there when we get married. I know I love him, but sometimes he is not what I consider to be responsible with money. There have been times in the past when he has taken out small loans or paid bills late in order to buy something he wanted. How can I talk to him about this?

 

Heather

 

Dear Heather,

 

If it were me, I think I’d make sure things move a little more slowly in the relationship until he gets his spending under control. Sometimes when things like this happen it’s just a situation where a person needs to learn the benefits of budgeting and handling money in a mature, responsible way. You can’t do something if you haven’t been taught how to do it, and hopefully this is the case with your boyfriend. 

 

You mentioned marriage, so that tells me you’re both taking this relationship seriously—that you’re in the process of making sure you want to spend the rest of your lives with each other. Bring it up gently, and tell him why you’re concerned. Share your hopes and dreams for the future with him. You might even offer to help him make out a monthly budget. That way, once he understands the process and value of spending money on paper before the month begins, it will be easier for him to stick to it.

 

Good luck, Heather!

 

—Dave

 

 

Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

 

 


Use Non-Retirement Account To Pay Off Debt?

Dear Dave,

 

I have $11,000 in a mutual fund account that is not a retirement account. My wife has a retirement account through her job as a teacher, but I do not have one at all. We’re in Baby Step 2, so should we cash out the $11,000 in the investment account to help pay off debt?

 

Chris

 

 

Dear Chris,

 

If this money is designated as non-retirement funds, I’d say go ahead and cash it out. Use the money to pay down debt, and continue to stay focused working the Baby Steps. Get that debt paid off, build an emergency fund of three to six months of expenses, then it’s your turn to start investing.

 

The quickest way to build wealth is to get control of your largest wealth-building tool—your income. When all your money is going out the door to other people, you don’t have that tool at your disposal when it comes to important things like saving and investing. There’s some math in there, but it’s also about behavior and being intentional. Getting out of debt dramatically shortens the distance between you and wealth.

 

A lot of people are having some major “never again” moments right now in the wake of COVID-19 and all the other stuff 2020 has thrown at us. They’re saying things like, “Never again will I be broke, never again will I have debt, and never again will I live with no savings to help take care of me and my family.”

 

You can do this, Chris. Get after it! 

 

—Dave

 

 

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.


You've Got To Change The Person In The Mirror

Dear Dave,

 

 

I’m just starting to pay off my debts. How do you feel about moving credit card balances to other companies in order to get lower rates? It seems like that would help me get out of debt faster.

 

Elizabeth

 

 

Dear Elizabeth,

 

I get what you’re saying. It might help speed up the process a tiny bit, but the habits that got you into debt in the first place won’t change just because you’ve switched credit card companies. What you’re talking about is an easy way to lower the interest rates—temporarily, in most cases—but it doesn’t keep you from taking on more debt.

 

Many people think they’ve really done something to solve their debt problems when they do this. But you’ve got to remember that getting out of debt, and gaining control of your finances, is all about changing the person you see in the mirror. You’ve got to make a commitment to getting out of debt, staying out of debt, and sticking to a written, monthly budget—that means keeping track of every, single dollar and living on less than you make.

 

In many cases, when people have problems with debt it’s the result of unwise lifestyle and financial choices. But guess what? When you change, interest rates don’t matter nearly as much. And when you shift your mindset about money, that will make a difference in a way that changing credit card companies and chasing lower interest rates can’t!

 

—Dave

 

 

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money MakeoverThe Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.


Show Them Your Value!

Dear Dave,

 

 

I’ve been with my company almost four years. Currently, I make the same money as a co-worker with the same title and the same amount of time on the job. But since we’ve both been there, I have taken on many more responsibilities than he has. What’s your advice on asking for a raise? I feel that I have the right to complain about the situation, and think I should make more money than he does.

 

Vincent

 

 

Dear Vincent,

 

If you honestly feel like you deserve a raise because of your effort and performance on the job, that’s fine. Sit down with your leader, and make an objective, logical, and reasonable argument for why you deserve more money. I wouldn’t mention your co-worker, because it’s just not relevant. What is relevant is the value you bring to the company. 

 

I understand how you feel right now. But no, you don’t have the “right” to complain. You agreed on your pay when you took the job, and you should perform your duties with integrity and character. What someone else does, or doesn’t do, isn’t tied to your personal compensation.

 

If you think you deserve a raise, and you’ve got the results to prove it, sit down and have a respectful conversation with you leader. Show him or her the numbers, and the value you bring to the company, and explain why you feel you should get more money.

 

Good luck, Vincent!

 

—Dave

 

 

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money MakeoverThe Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

 


Evaluating Insurance Needs

Dear Dave,

 

Last year I got a divorce. I’m 32, a teacher and a single mom. I’m on Baby Step 2 right now, and I was wondering about life insurance. My son is only two, and if something happened to me, he would go to his father. His dad is in good shape financially and responsible with money, so how much life insurance should I have?

 

Christian

 

 

Dear Christian,

 

Well, you probably don’t need the full 10 to 12 times your income like I recommend for most people. The only dependent you have is also dependent upon his dad. And from what you said, his father seems perfectly able to take care of him.

 

I’d get a good term life policy equal to the amount that you’d like to supplement your son’s care. The good news is you can get a couple hundred thousand in life insurance at your age for practically nothing.

 

If you get life insurance, make sure his dad—your ex—is not the beneficiary. The beneficiary should be a family trust, formed upon your death, and the money would go into that trust for the benefit of your child. You set the terms of the trust. It should not be controlled by your ex. In a divorce situation, I would never name someone I’m not willing to be married to the trustee of my money on behalf of my child. 

 

I’m so glad you’re thinking about these things, Christian. It shows you’re an intentional lady, a fine mom, and a good planner. Those traits will serve you and your son well! 

 

—Dave

 

 

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money MakeoverThe Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

 

 


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NIAGARA NEWS MINUTE 6/21/21