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Dave Says

Leaning to Say No

Dear Dave,

 

We’re debt-free except for our home, and we’ll have our fully-funded emergency fund of three to six months of expenses, we’ve agreed on six months’ worth, saved up by the end of February. We’re also setting aside a little each month to buy a newer car with cash later. We’re about $5,000 from our car fund goal, but my husband is getting impatient. He wants us to go ahead a finance the remainder, since it’s a relatively small amount. He has tried to justify this by mentioning that you don’t seem to have a problem with people borrowing money to buy a house. Could you explain the difference?

 

Lana

 

Dear Lana,

 

Okay, first things first. I don’t like debt of any kind. I don’t really like borrowing for a house, but I’m not unreasonable. I tolerate mortgage loans, as long as people use a 15-year, fixed rate mortgage, with payments that are no more than a fourth of their monthly take-home pay. A house is often the largest purchase in a person’s life, and one most people can’t achieve based solely on saving. I still recommend, however, setting aside as much as possible for a down payment before taking out a mortgage.

 

Here’s the thing. Cars go down in value, while traditional homes generally increase in value substantially over the years. Plus, you can get an absolutely great, pre-owned car for $10,000 to $15,000 dollars. This is an amount which, in my mind, is doable over the course of several months through determined saving and living on a budget. Depending on where you live, a good home can cost 10 to 20 times that much.

 

The best way to build wealth and have a secure financial life is to stay away from debt. This means getting out of mortgage debt as quickly as possible, too. You’re never going to win with money if you can’t learn to delay pleasure.

 

Everyone has that little kid inside them, and that little kid wants everything he or she wants right now. Your husband is asking a normal question, but he’s dangerously close to letting that immature little kid out. It happens to all of us once in a while, but we have to grow to a point as adults where we tell that little kid no!

—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.

 


Keep Your Dignity, and Work Your Way Out

Keep Your Dignity, and Work Your Way Out

 

Dear Dave,

 

My wife and I will both turn 30 next month. We have two young children, and we make a little over $85,000 combined. The problem is we have about $70,000 in debt. Some of it is credit card debt, but nearly $50,000 is in two car loans. Her mom and dad have offered to let us move in with them, so we can save up money and start getting a better handle on our finances, but we’re not sure how we feel about this. What’s your advice?

 

Justin

 

 

Dear Justin,

 

You’ve got a ridiculous amount of money wrapped up in those cars. I’d sell the stupid things, get into a couple of little beaters, and start living on a budget and paying down debt.

 

In your situation, the only scenario where I’d even consider taking the in-laws up on their offer is one where the stay is for a very short, agreed-upon period of time. They’d have to be absolutely wonderful people, too, and everyone involved would need to know their boundaries.

 

But you guys can get out of debt pretty fast if you’ll just lose the cars. You could even save a little money on the side while you were paying down debt, and buy a better car as soon as the debt was gone.

 

You might love your cars so much that you’re unwilling to make the sacrifice. Not me. I’d rather keep my dignity intact, and work my way out of the mess I created!

 

—Dave

 

 

Playing The Lottery Robs You of your Future

 

 

Dear Dave,

 

I’ve been struggling financially for the past few months, so I’ve been playing the lottery once a week. To me, the chance to win millions is worth a few dollars a month, even if things are tight.

 

Paula

 

Dear Paula,

 

You’ve told me you’re having money troubles, and at the same time you’re throwing money out the window every week? Honestly, the small amount you’re talking about doesn’t make a difference. Even if it’s just two or three bucks a week, that action represents a lot of financially irresponsible behavior in your life.

 

I’m going to be very blunt with you. The lottery is a tax on the poor and people who can’t do math. Your chances of winning are bleak at best. Did you know the odds of winning the Powerball jackpot are about 1 in 292,000,000? There are plenty of other very unusual things that are much more likely to happen to you than winning the lottery. Your chances of making a hole-in-one on the golf course are about 1 in 12,500. Even your odds of having quadruplets are around 1 in 11 million.

 

When times are tough and you’re strapped for cash, the last thing you need to do is spend what little you have on gimmicks. My advice is to focus on working hard, living on a tight budget that cuts out all unnecessary expenses, and saving every penny you can. Unlike the lottery, this is a plan that works every time. When you start living on a budget and get out of debt, it provides a little bit of breathing room in your life. You might even feel like you got a raise!

 

Don’t let your finances—and your dreams—be hijacked by the lottery.

 

  —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.

 

 

 


How To Make Goals and Resolutions Become Reality

Dear Dave,

 

My wife and I have our budget ready for next month, and we’ll be following your plan in 2020 to pay off debt and get our finances in order. Do you have any tips for setting and sticking to goals in general?

 

Rick

 

Dear Rick,

 

That’s a fantastic goal. Living on a monthly budget, and telling your money where to go instead of wondering where it went, is an important step toward gaining control of your finances. Combine that with getting out of debt, and you’ll be in charge of your most powerful wealth-building tool—your income.

 

If you’re following my plan, you already have goals in front of you where your money is concerned. For most Americans, though, a new year means nothing more than new resolutions without real plans. Don’t get me wrong. It’s good to make resolutions and set goals, but you can’t stop there. You have to formulate a plan that turns your dreams into bite-sized pieces of progress that will gradually create a big event in your life. If you want to achieve your goals, then keep these next things in mind.

 

When setting goals, be very specific in what you want to achieve. Include steps that will help you get there, too. Being vague will only cause you to feel directionless and overwhelmed. Most people give up when these feelings arise.

 

Make your goals measurable. If you want to lose weight, don't simply write down "lose weight" as a goal. Exactly how much weight do you want to lose? What will it take in terms of exercise and dietary changes to make it happen?

 

Are your goals your goals? Only you can realistically set your own goals. If your spouse, co-worker, or friend sets a goal for you, chances are you’re not going to achieve it. Taking ownership will give you more opportunity to meet your goal.

 

Also, set time limits for your goals. Putting a time frame in place will help you set realistic goals. If you want to save a certain amount of money for a particular event, break it down and determine how much cash you need to put into your savings account each month leading up to that event.

And finally, put your goals and resolutions in writing. Putting them in writing will make you more likely to achieve them. Write down your goals, and review them often. This will give you motivation to make them reality.

 

I believe this is the process for success, Rick. Successful people reassess their lives regularly, and start living intentionally, in writing, and on purpose. Happy New Year!


—Dave

 

 

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The 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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