banner
banner
banner
banner
banner
banner

Dave Says

It's Really About Giving and Putting Others First

 

 

Dear Dave,

 

My wife and I have always attended church, and we have always tithed. Over the last few months, we have come to the decision it is time for us to find a place to worship that is a little more involved in the community. If we are actively looking for a new church, should we continue to tithe to our current church? Would giving our tithe money to a charity be better? We both agree it feels strange to continue giving to our current church when we would rather be somewhere else.

 

Brad

 

 

Dear Brad,

 

There’s nothing wrong with continuing to tithe to your current place of worship until you find a new church home. It would probably be alright, too, if you gave your tithe to one of the places you visit while you’re looking. When it comes right down to it, it’s all about learning to be a giver and putting others first.

 

I can tell you two are taking this situation very seriously. But I mean, it’s not like He needs the money, you know? Tithing isn’t about making a deposit into God’s bank account, or building up spiritual brownie points. It isn’t a salvation issue, either. It’s all about changing our hearts and our minds. It’s about being a little less selfish, and a little more Christ-like. I believe it makes God smile when we put other people’s needs ahead of our own wants.

 

There are some pretty strong indications in scripture that a tithe—which is a tenth of your income—should go to your local church. I have no problem with giving to responsible charitable organizations, too, but when it comes to tithing, I’m not sure a generic charity is the answer.

 

My wife and I have had times in our lives when we changed churches, and in the periods when we didn’t have a home church, we’d write out the checks just like normal, but leave the “pay to the order of” portion blank. That way, the money was already accounted for in our minds and in our checkbook. Then, when we found a place that really spoke to us, we’d complete the checks and give them to that church.

 

I hope this helps a little, Brad. 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.

Teach Them, Don't Enable Them

 

 

Dear Dave,

 

My younger brother and his wife did their taxes last month and learned they owe $15,000 to the IRS. I love them both, but they are extremely irresponsible with money. I know they have a lot of credit card debt, too. I am debt-free, including my home after following your plan, and would like to help them. I was thinking about taking out a one-time loan from the bank to help cover what they owe the IRS, because my emergency fund is a little low after a recent car accident. Under the circumstances, would this be okay?

 

Carson

 

 

Dear Carson,

 

In my mind, “help” would be aiding them in changing their ways with money. I don’t say this to be sarcastic or mean, but it’s the truth about where they are in life right now. They both need to be educated, not enabled, when it comes to their behavior with money. This doesn’t mean they’re bad people, but it does mean you don’t need to be a party to, or a temporary fix for, their bad financial decisions.

 

Some people might say taking this attitude would mean you don’t love and care about your brother and his wife. Those people would be wrong. You’ve already told me they won’t behave with money, so at this point it would kind of be like giving a drunk a drink. You don’t give more money to people who won’t behave with it. That solves nothing, and in most cases it just reinforces the negative behavior.

 

This might be a good opportunity to sit down with your brother and his wife, and have a firm—but gentle—talk about their situation. Maybe you could offer to teach them the things that worked for you when it comes to finances, using the Baby Steps as your guide. And, make sure they get in touch with the IRS about a payment plan.

 

I know you love them, but you can’t fix this for them. In some cases, the best thing you can give someone is the understanding that they need to change their behavior. Hopefully, with you as their inspiration and support, they can learn how to manage their finances wisely.

 

Good luck, and God bless you all, Carson!

 

— 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.

You Can Have More Than One

 

 

Dear Dave,

 

A relative of mine recently mentioned she had two life insurance policies. Is it okay for a person to have more than one life insurance policy? If so, why would someone do that?

 

Victoria

 

 

Dear Victoria,

 

There aren’t any rules against having more than one life insurance policy. The only real problem is it might complicate your life a little in terms of having multiple premium withdrawals, checks or possibly additional policy fees to worry about every month. It’s cheaper just to have just one policy, generally speaking, but regardless of whether you have one or more, I always recommend having 10 to 12 times your annual income wrapped up in a good, level term life insurance policy.

 

Different people have different personal and business financial situations, so there could be many reasons to have more than one life insurance policy. I have lots of insurance connected to our estate plan, our business and different kinds of things. Most life insurance companies will only write so much in coverage for one person, so when this has been the case, I just went to another carrier for additional coverage.

 

Also, some people buy more than one life insurance policy just to feel secure from a provider standpoint. If one insurance company goes out of business, they’ll still have another policy—or more—in place. That’s not usually a big problem, though, since the majority of insurance companies have insurance to back them up with the state, or are very financially stable.

 

I hope this helps, Victoria!

 

— 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.

The Idea's The Same

 

 

Dear Dave,

 

I own a small business. How much should I have in a business emergency fund when my annual sales are around $100,000? Currently, I have two months of expenses set aside.

 

Theresa

 

 

Dear Theresa,

 

Generally, I like the idea of small businesses having about six months of expenses on hand. That kind of cushion usually eliminates the need for borrowing money. It also provides peace of mind. And if you’ve been an entrepreneur very long, you know that’s an invaluable thing.

 

Having a personal emergency fund set aside is a little different than having one in place for your business. When it comes to personal finance, I recommend having three to six months of expenses set aside. The basic idea is the same, though. A fully-funded emergency fund gives you an option—besides debt—when unexpected things happen!

 

— 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.

 

I Wouldn't Go That Far

 

 

Dear Dave,

 

Our son is in high school, and he has a part-time job. He makes good grades, and we have always tried to teach him how to save and handle money according to your advice. He has even managed to set aside a few thousand dollars for college. My wife and I were talking the other night, and I brought up the idea of charging him a small amount for rent, maybe just $20 or $25 a month, to help him be even better prepared for the real world. What do you think about this?

 

Keith

 

 

Dear Keith,

 

I appreciate the fact that you’re looking for teachable moments. But making a high school kid pay rent? No, that’s a little over the top.

 

Listen, you and your wife are already way ahead of a lot of parents. Teaching him financial responsibility and the importance of education are great things. It sounds like your son is a bright, motivated young man, too.

 

I talk to adults all the time who are decades older, but still don’t grasp the concepts of maturity and responsibility like this kid does already. With the kind of start you’re giving him, I think he’s going to grow up to be a very successful adult. Keep up the good work, and let that young man know how proud you both are of him!

 

— 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.

Follow The Plan, and Make Stuff Happen!

 

 

Dear Dave,

 

I just started Baby Step 3 of your plan. It took me about 12 months to pay off $8,000 in debt during Baby Step 2. I am 50, and I work in the printing industry making about $38,000 a year in a city with no local or state income tax. I have not done a lot about retirement yet, and that worries me now that I am learning to manage money in a smarter way. How can I stay on track with the Baby Steps and still do something about retirement?

 

Blake

 

 

Dear Blake,

 

I generally look at a timeframe of six months to a year for saving a fully funded emergency fund. So, if it took you about a year to pay off $10,000 in debt, you’re probably looking at about the same length of time—or less, since the debt is gone—to save up an emergency fund. Keep in mind that an emergency fund is three to six months of expenses, not income.

 

But here’s the thing. If you start building retirement right now and have an emergency, do you know what you’ll use? Yep, you’ll use your retirement. That’s why an emergency fund comes before retirement in the Baby Steps.

 

The median household income in America is around $68,000, and that’s often two incomes. You’re probably working pretty hard for that $38,000, so I would challenge you to think about and work toward something you could be doing in the near future to make that much money or more.

 

I want you to open your mind and imagination, and start thinking fresh again. Don’t do something silly like quit your job today, but if you’re going to be making $38,000 five or 10 years from now it’s time to aim at something else.

 

I’m trying to speak to your retirement fears, as well as warn you against addressing retirement without having an emergency fund in place. Save up a solid emergency fund over the next year, while at the same time doing some serious thinking and goal setting.

 

Maybe you’d like to do something completely different, or even own a printing company by that time. Who knows? The cool thing is you can make it happen, and the choice is all yours!

  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.

Don't Sell Yourself Short

 

 

Dear Dave,

 

What is the best way to invest a one-time lump sum of $2,500? My plan is to leave the money alone and let it grow for a long time.

 

Karole

 

 

Dear Karole,

 

Some people play single stocks on one-time investments like this, but I don’t like that idea. Single stock investments don’t consistently generate the kind of returns over long periods of time that a good mutual fund will. Why sell yourself short?

 

When it comes to investing, I consider 10 years or more to be a long time. That being the case, I’d suggest a growth stock or growth and income mutual fund with a solid track record of 10 to 20 years.

 

I hope this helps!

 

— 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.

Choosing an Executor Is a Vital Part of the Estate Planning Process

 

 

Dear Dave,

 

What exactly is an executor, and what part do they play in someone’s will?

 

Gabe

 

 

Dear Gabe,

 

Simply put, an executor manages the last will and testament of someone who dies. Acting as an executor is an honor and a huge responsibility. As the designated representative of the deceased, executors are responsible for making sure the deceased’s assets are distributed according to the will. Executors deal with probate court, tell everyone who needs to know about the death, pay outstanding debt, distribute assets, and generally represent the deceased person whenever needed.

 

Think of someone you know who is trustworthy, conscientious and good at talking to people. This person also needs to be mature, capable of handling life events with a level head and have an honest heart. You need to think about where your potential executor lives, too, because they could end up spending a lot of time working with the courts in your area. If you already have someone in mind who has all the right personal qualities, but lives out of state, research your state’s requirements for an executor’s location. Virtual meetings could be a possibility.

 

The amount of time needed for an executor to handle your affairs when you’re gone could be enormous. Depending on the complexity of your estate, it could take months—or even years. Once you settle on someone as executor, be honest with them about all the responsibilities that come with the job. And if you’re unable to find someone appropriate, you can always hire a professional executor.

 

Great question!

 

— 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.

These Debt Reduction Strategies Are Bad Ideas

 

 

Dear Dave,

 

I’ve been seeing lots of ads lately for debt consolidation companies, debt settlement companies and the HELOC. Are any of these methods for reducing debt a good idea?

 

Brent

 

 

Dear Brent,

 

No. These are all bad ideas when it comes to getting out of debt. There’s a lot of buzz these days surrounding all the “quick” and “easy” ways to clean up debt and get control of your finances. But the truth is neither one is ever easy. If something sounds too good to be true, it probably is.

 

Debt consolidation is basically a loan that combines all your debts into one single payment. Sounds like a great idea at first, right? But then you find out the lifespan of your loans increase, and that means you’ll stay in debt even longer than before. The low interest rate that looks so appealing in the beginning usually goes up over time, too. Stretching out the amount of time you’re paying off debt, plus adding interest, is just dumb.

 

Debt settlement companies are awful. These crummy outfits will charge you a fee, then promise to negotiate with your creditors to reduce what you owe. In most cases, they take your money up front, do a bad job “negotiating” your debt and leave you responsible for what’s left.

 

A home equity line of credit (HELOC) is also a bad idea. With a HELOC, you’re borrowing against your home. On top of that, you risk losing your house if you can’t pay it back on time. All these plans are really just gimmicks that only treat the symptoms of your money problems. They never help you address the root issue of why you landed there in the first place. Personal finance is always 80% behavior, and 20% head knowledge. You have to change your behavior if you want to make a lasting, positive impact on your finances!

 

— 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.

Is It a Loan, Or Is It a gift?

 

 

Dear Dave,

 

We have $15,000 in credit card debt. My husband works very hard, but only makes about $25,000 a year. We’re also living in a very old trailer right now, and I stay at home with our newborn. My dad told us he is willing to pay off our debt if we agree to get financial counseling together, and show that we are serious about doing better with our finances. What should we do?

 

Harper

 

 

Dear Harper,

 

I wouldn’t accept the money from your dad if it’s going to be a loan. If you really want to ruin family events, have debt to your parents. It twists you up inside. And it’ll be especially hard on your husband. No matter what anyone else says, the borrower is always slave to the lender.

 

If it’s going to be a gift, meaning there’s no expectation of repayment, that’s a different story. Still, I think your dad has a great idea in making the debt payoff contingent on you two going to some kind of financial counseling, and making a proactive effort to change things, get out of debt and save money—for your child’s future and for yours. I’d probably do the same thing.

 

It doesn’t sound like you’re being crazy with your money, but it’s tough to provide for a family on that kind of income. You and your husband need to sit down together, develop a monthly budget and a realistic five-year plan to improve his earning potential. Make it a date night. Hold hands, do something inexpensive you both enjoy, and let him know he can be anything he wants to be. Then, help him decide exactly what and where he wants to be in five years. What does he want to be making, and what feasible steps can he take educationally or in terms of job training to get there?

 

If you want to go to work at some point when your baby is a little older, that’s fine. I completely understand the desire to be at home with a brand new baby. But hard work alone just isn’t enough these days. You’ve got to boost your brain power and value in the marketplace, too. God bless you guys!

 

— 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.

 

How Much Dirt, And How Much House?

 

 

Dear Dave,

 

My wife and I own a small catering business. We have a few big corporations as clients, and our company has been very successful over the last two or three years. Now, we are planning to build a house. I was wondering what you think about how much should be spent on the land itself versus the construction of the actual house. 

 

Lee

 

Dear Lee,

When the whole thing is done, the payment you end up with shouldn’t be more than 25% of your take-home pay on a 15-year, fixed-rate loan. The ratio of land to house can vary, and that part’s up to you. If you’re buying a big piece of land, you’re probably going to have a higher ratio of land cost to home cost than if you bought a simple lot and put a really nice home there.

 

Generally, a standard subdivision lot is going to be around 20% of the total price. If you spend $100,000 on the lot, you’ll end up with a total project cost of about a half-million. Now, keep in mind that’s just a fairly standard ratio. It’s not a rule.

 

The only rule here is my rule about mortgage payments. Again, no more than 25% of your take-home pay on a fixed-rate, 15-year note. Otherwise, you can end up house poor. And when you’re house poor, it takes away your ability to save, build wealth, and give.

 

Having a big house and a lot of land is cool if you can afford it, Lee. But it’s not worth it if it’s financially stressful and prevents you from living your best 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.

Where Should He Park The Money?

 

 

Dear Dave,

 

Our son is 13, and he has been doing some part-time work for a friend of the family. He makes $40 to $60 a week, and he would like to begin investing the majority of what he earns. Do you have a suggestion for a good place he could put his money?

Lindsay

 

 

Dear Lindsay,

 

Well, here’s the thing. At this point in his life, the goal of this investment isn’t wealth. Number one, it’s not a lot of money. Number two, well, it’s not a lot of money. The goal is to create knowledge, reward his interest in the subject and teach him how to handle his finances when he’s an adult.

 

I’ve got no problem with you helping him open checking or savings accounts at a local bank or credit union. There are lots of good lessons to be learned in reconciling a bank statement, and the value of spending, saving and giving. Then, you could get with a good financial pro, one with the heart of a teacher, and let him open a mutual fund for $50 a month with you as the custodian. He could learn about compound interest, how to calculate the value of his shares and other things, and all that would be a good learning exercise, too.

 

We did these things with our kids. But keep in mind that over the course of a year—and when you’re 13, that’s an eternity—there’s not going to be a lot of action on the investing side of things. It could be kind of boring for him at times. But he’s better off to learn now that good things don’t always come with flashing lights and whistles.

 

When it comes to wealth building, things aren’t sexy. Slow and steady wins the race!

 

— 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.

Budgeting For Car Repair Costs

 

 

Dear Dave,

 

I am following your plan, and recently became debt-free, but I have a question. When doing a monthly budget, should I figure in a specific category for car repairs and maintenance, or just use my emergency fund?

 

Ashleigh

 

 

Dear Ashleigh,

 

Congratulations on becoming debt-free! You know, new cars, old cars and in-between cars all have one thing in common — they’ll need repairs at some point. Fixing your car is just a basic part of car ownership, and something every car owner should be prepared for.

 

When life happens, to your vehicle or anything else, an emergency fund acts like an airbag. Only instead of keeping your face from hitting the dashboard, it keeps your finances from getting smashed up. When it comes to car repair costs, I advise creating a sinking fund in your budget. A sinking fund is a special place in your budget where you save up money for specific, big ticket items — like car repairs.

 

I know, stuffing money into a sinking fund each month sounds about as enjoyable as waiting in line at the DMVBut look at it this way, if you had a car loan like most people, you’d be putting hundreds toward that debt each month. Instead, you’re one of the smart ones who doesn’t have any debt and can easily create a repair fund for your car by setting aside less than the average car payment each month. Even “reliable” cars need repairs and maintenance, and a sinking fund within your budget for this sort of thing means you’re ready to handle virtually any auto issues that pop up.

 

You know you’ll need to pay for repairs and maintenance. It’s a thing with all cars. And when you know something’s coming, that’s not an emergency fund situation. Great question, Ashleigh!

 

— 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.

 

Teach Them To Be Givers...And Be An Example

 

 

Dear Dave,

 

With all the commercials and marketing that accompany the holiday season, how can parents teach their young children about giving and putting others first at this time of year?

 

Maryn

 

 

Dear Maryn,

 

Christmas is a traditional time to give and help others. But even for adults, it’s easy to get so caught up the glitz that we end up forgetting to teach our kids how to give and why it’s so important. How do we make sure they learn the satisfaction of giving to others at an early age? Here are a few easy ideas.  

 

Send an extra snack with them to school. Then, at lunch they can give it to a friend. When they get back home, find out who they shared the snack with and talk about what happened. It can be as simple as that. Also, encourage your kids to pass along compliments. Sharing a kind word with a classmate, or even their teacher, will go a long way toward brightening someone’s day any time of year.  

 

When you’re involved in giving or helping others in any way, take your kids with you. If you’re sponsoring a family through your church, or participating in a charity drive, let your kids be part of the buying and delivery process. When you make giving memories together, they’ll stick with your kids for years to come.

 

If you really want to make the kids part of the process, you could let them pick a charity to help. If you give them a commission for doing jobs around the house, or if they’re older and have a part-time job, they can start saving a percentage to donate. Another idea might be giving away old toys. Take some time to gather up all the toys they don’t play with and don’t want anymore. Search the closet together, and choose things to take to Goodwill or another charitable organization.

 

Remember, you’re the adult. That means it’s your job to set an example and create teachable moments. So, this year give your kids nice gifts within your budget. But take time to create situations that allow them to participate in wonderful giving experiences, as well — because giving truly is better than receiving.

 

Merry Christmas, Maryn!

 

— 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.

 

What's The Best Thing?

 

 

Dear Dave,

My wife and I are trying to help our son and daughter-in-law. They are both 29-years old, and they have been married for three years. They have good jobs, but the problem is they ask for money on a regular basis. Helping them out hasn’t been a strain, because we’re in good shape financially, but we have started encouraging them to live on a monthly budget. They always say they will try, but it never seems to happen. At this point, it feels like we may be enabling them instead of helping. How can we make sure we are doing the best thing?

C.M.

 

 

Dear C.M.,

 

The first thing you and your wife need to do is sit down and have a loving, but serious, talk with these kids. If they’ve asked for money before, and this is something that has turned into a habit, you have every right to know more about their spending and other circumstances.

 

Don’t be surprised if they act defensive, or maybe even get angry. People are often embarrassed to admit to, or talk about, their mistakes. They may even tell you these things are none of your business. If they do, that’s fine. But they should understand you two won’t be opening your checkbook again if they don’t open up about their financial behavior. This isn’t about mom and dad being controlling or snooping around, it’s about you and your wife making sure you’re not enabling what you consider to be bad behavior going forward.

 

It always hurts parents to see their kids go through things like this. But if they’re acting irresponsibly with money, they need to suffer the consequences of their actions. Who knows? That, along with your love and guidance, might help put them on the right track to win with money!

 

— 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.

Keep Things As Pleasant As Possible

 

 

Dear Dave,

 

I don’t really see eye-to-eye with my dad and older brother on many things. This is not a new realization on my part, but over the last few years it has led to hard feelings and various arguments at family gatherings about religion, finances and other things. With Christmas coming up, I would like to avoid conflict and try to handle things a little better with them. Do you have any advice?

Cam

 

 

Dear Cam,

 

It takes a strong, level-headed person with a good heart to want to approach a situation like this with maturity and love. I’m proud of you for trying to create better relationships within your family.

 

My initial advice would be don’t take discussions too deep, and make a conscious effort to stay away from any hot button topics you know already exist. I’m no family counselor, but the chances of you changing a lifetime of differences and toxic behaviors, or bringing them around to your way of thinking, in one brief interaction are probably pretty small.

 

Don’t tell them you think what they’re doing is wrong or that you feel they’re bad people if things get a little tense. My best advice is to be a model of sanity and reason if you feel a confrontation brewing. Situations like this are hard to deal with, especially when the conflict is between a father and son or two brothers. It’s hard on you and them, plus it has a negative impact on the rest of the family during what is supposed to be a joyful and loving time of year.

 

These are people you love and care about, even if they are hard to get along with or understand sometimes. Pray for them, Cam. And ask God to give you guidance, patience and understanding in this situation, too.

 

— 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.

Address The Deeper Issues

 

 

Dear Dave,

 

My boyfriend is not very good with money, and he is in a bad situation right now. He has a huge car payment every month, plus about $30,000 in credit card debt. He also lives in a very expensive apartment. He recently quit a really good job because he doesn’t like his boss anymore. He has talked about filing bankruptcy, and yesterday he asked if he could move in with me. I love him, but I’m also scared. I try to manage my money well by saving, investing for retirement and staying out of debt. What does this mean for our future together?

 

Crislyn

 

 

Dear Crislyn,

 

My guess is the guy’s not really bankrupt, but it sounds like he has some maturity and character issues that need to be addressed. I’m not saying things can’t change, but this is not someone to move in with or consider marrying anytime soon. You two would have a hard time as husband and wife unless he makes some real course corrections in his attitudes about money and life.

 

For starters, he needs to get another job, sell the expensive car and find a cheaper place to live. Leaving one position for another is okay, but deciding you just don’t like something and walking away from it without another job waiting—especially when you’ve got bills and a bunch of debt—is just plain irresponsible.

 

Lots of people identify too strongly with what they drive or where they live. They come to believe those things are indications of their value or worth, and that’s sad. It means something inside them is broken, and bankruptcy isn’t going to fix that.

 

All this doesn’t mean he isn’t basically a decent guy, but it does mean he needs to get control of his finances—and that he’s got some soul searching and growing up to do.

 

—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.

Work Together, and Be Intentional

 

 

Dear Dave,

 

My husband is a union member and works at a paint factory near our home. His union’s current contract will expire in nine months. We have about $27,000 of debt left to pay off, and he makes a little over $80,000 a year. I’m nervous because his slow season is coming up between now and then. During this time, he usually gets about half the hours — and, of course, less money — than he does during the rest of the year. I’m a little scared, even though there hasn’t been a strike in the last six years. Do you think we should go ahead and pay off our remaining debt or hold onto every penny in case they walk out?

 

— Cheyanne

 

 

Dear Cheyanne,

I’m going to tell you something that might just blow your mind: You two can pay off the debt and have some money set aside to live on in that length of time. If you do that, you’ll actually be more ready for a strike than ever before. You’ll both have to be on the same page financially and do things with a sense of urgency, but right now, I don’t think you’ve got too much to worry about.

 

The likelihood of them going on strike is pretty low. Chances are, they’re just rattling their sabers and talking big to posture for the negotiations. Most factories are behind right now, and the last thing they want is to get even further behind. Everything has been so screwed up by COVID-19 that unless the union demands some completely ridiculous stuff, things will probably work out fine.

 

I think you guys are going to be fine, Cheyanne. Should you be intentional and thoughtful about the situation? Absolutely. It’s always wise to look ahead and plan for the future. Getting that debt paid off and saving up a bunch of cash will give you real peace of mind.    

 — Dave

 

Dave Ramsey is a seven-time No. 1 national bestselling 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,” “Fox News,” “CNN,” “Fox Business” and many more. Since 1992, Dave has helped people take control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

There Are Better Options

 

 

Dear Dave,

 

I’m coming up on a transition phase in my life. I’ll be leaving the military soon, and I’ve been evaluating my living situation once I am out. My parents said I could live with them for a while, but I am not sure that would work out well. I have done some research on renting versus buying a home, but I understand that you hate VA loans. Can you clarify as to why you feel this way and give some advice for a person in my situation?

 

Tyler

 

 

Dear Tyler,

 

Hate might be a strong word for how I feel about VA loans, but there are some things you should know about them. Number one, VA loans are usually more expensive, with the interest rate and all the fees, than FHA or conventional loans. Number two, the reason most people gravitate toward a VA loan is they can get a house with no money down. But if you’re trying to buy a house with no money down, it means you’re too broke to buy a house!

 

When you buy a house, and you’ve got no money in the bank, that house is going to be a curse instead of a blessing. What happens if you buy a home this way, and the air conditioner goes out next week? What happens if your car needs a new transmission next month? Most people who find themselves in situations like this start piling on debt to fix things, and that’s not a wise answer.

 

VA loans and other “no down payment” mortgage loans allow you to buy a home from a position of financial weakness rather than a position of financial strength. Don’t get me wrong, I want you to own a home someday. I just don’t want the home—and a bunch of other debt stacked on top—to own you.

 

My advice is to rent a decent, affordable place for a while and concentrate on getting your new life and career off the ground while saving some money. You might even consider a roommate situation for a while to help cut costs. But you don’t need to be buying a home right now.

 

Good luck and God bless, Tyler. And thank you for your service to our country! 

 

—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.

 

Let's Tweak That Idea a Little

 

 

Dear Dave,

 

I am on Baby Step 2, and I started a YouTube channel earlier this year that led to a new opportunity to make additional income. I try on and review clothing, and I’m paid $30 for each clip that’s anywhere from 30 seconds to two minutes long. Right now, I have about 1,000 viewers. This requires me to buy items from several brands. I usually return the items when I’m through filming, but I’m currently funding this with a credit card I only use for this project. I only pay the minimum each month until I get the refund, so at any given time there can be up to $4,000 on the card in rotation. I make about $86,000 at my normal job, so is this an okay way to fund my project and chalk it up as a business expense?

 

Amber

 

 

Dear Amber,

You’re taking a risk here, from a business perspective, by playing around with $4,000 in debt to make $30 a pop. That’s inordinate. And you shouldn’t be paying for the clothes in the first place. These brands should be giving you clothes to review—that you keep—for the marketing exposure, but I’m not sure you’ve got enough eyeballs on you yet to justify them giving you the clothes for free.

 

Basically, it sounds like you’re trying to put yourself in a position to be an influencer. And the way influencers get paid is by monetizing eyeballs. Obviously, YouTube and other platforms will pay you if you can get the eyeballs. But 1,000 viewers really aren’t a lot these days. You’re getting there, though, and I’m glad you’re working at it and trying to make things happen.

 

You make good money, Amber. I want you to set aside $2,000 or $3,000 for this business, maybe out of the business income, and prime the pump one time. By that, I mean open a separate checking account that’s for your clothing exchange process only. Here’s the thing, let’s say you bought $1,000 worth of stuff from one of these companies, and they suddenly decide they’re not taking it back. You just ate that $1,000. And guess what else? Now, you really have credit card debt.

 

There are three things you can always be sure of in business. One, it’s going to cost twice as much as you think it will. Two, it’s going to take twice as long as you think it will. And three, you are not the exception to these things. While we’re at it, add this to the list of stuff you can always be sure of—you’ll never find me advising or endorsing credit card debt!

 

—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.

Protect Against Inflation?

 

 

 

Dear Dave,

 

All the talk on the news about inflation is a little scary. Is there any way to protect yourself against it on a day-to-day basis?

 

Garret

 

 

Dear Garret,

 

When people start talking about inflation, it seems like there are always some who want to start collecting gold, fill every container they own with gasoline and stick their cash under their mattresses. But listen, you can prepare for inflation and address the results without being panicked.

 

You are still in control of your money, inflation or not. You’ll be able to make sure your money is going toward the right things, while being able to find places where you can cut spending, if you’re living on a written, monthly budget. If you’re noticing the prices of things like food and gas rising in your area, you’ll need to adjust your budget to account for this. That way, you’ll know exactly what you’re working with, and it will help you avoid any nasty surprises.

 

If you’re really feeling the pinch and want to save even more, look for specific ways to lower your grocery bill or save money on gas. Maybe it’s time you switched to generic brands, or started a carpool into work. If you find great deals on canned food and things you can stock your pantry with—I’m talking about stuff you’ll actually use—go ahead and buy a little extra. Just make sure you’ve budgeted for it before heading to the grocery store. You’ll want to already know exactly what you’re going to spend, so you don’t get swept up into impulse buying.

 

Like it or not, inflation is a thing. If you plan on retiring one day, it’s pretty much guaranteed that the cost of a loaf of bread, a tank of gas and even a cup of coffee will have gone up by then. The best way to protect yourself against inflation that’s bound to happen is to invest your money—and the sooner the better. But remember, if you still have debt other than your mortgage, and don’t have an emergency fund of three to six months of expenses, you need to take care of those things first!

 

— 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.

Teaching The Value Of Work

Dear Dave,

 

What are your views on teaching children good work habits? Many of our friends don’t require their kids to help out or work around the house, but we both strongly feel that instilling a strong work ethic early in life is one of the best things you can do as a parent for your children.

 

Deshay

 

Dear Deshay,

I’m so glad you both feel that way. Our culture has made many great advances to ensure the happiness and well-being of children. But too many parents today are so centered on what their children want that they have lost perspective on what their children need.

 

Perspective, or looking at life over time, demands that you teach children to work. Teaching a child to work is not child abuse. We teach them to work not for our benefit, but because it gives them dignity in a job well done today and the tools and character to win as adults in the future.

 

In my mind, children should be taught to work just like you’d teach them to bathe or brush their teeth—as a necessary life skill. An adult who has no clue how to tackle a job and finish it with pride is every bit as debilitated as an adult with body odor or green teeth. If your child graduates from high school, and his or her only skill set consists of playing video games, eating fast food and believing the world owes them something, you’ve set up your child to fail.

 

Another benefit of teaching a child the wonder of work is they may grow to lose a little respect for those who refuse to work. I’m not talking about folks who lost jobs due to unforeseen circumstances and are trying to get back on their feet, or someone who genuinely cannot work. I’m talking about folks who refuse to look for, or accept, gainful employment.

 

My wife and I noticed that our kids, as they grew older, didn’t pursue relationships with people who didn’t understand the value of work and demonstrate the character traits of mature, hardworking people. And that was wonderful news to us!

 

— 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.

Sounds Suspicious to Me

 

 

Dear Dave,

 

My husband and I have a rental property in South Carolina we want to sell. The current renters’ lease is up in December, but our property manager tells us the renters won’t let anyone in the home, not even just for photos to post online due to COVID-19. How do you think we should handle this situation?

   

Tracy

 

 

Dear Tracy,

I don’t know much about current COVID-19 restrictions in South Carolina, but this sounds suspicious to me. I’m also thinking your property manager is kind of a wuss, but I have the spiritual gift of cynicism.

 

I’m old school, and if I own a house, I’d like to go in it any time I want—within reason, of course—if renters are in there. They have the legal right of quiet enjoyment, meaning I don’t get to show up at all hours and harass them. But I’m not letting them stiff-arm me and use COVID-19 as an excuse. I mean, tenants thinking they have the right to give the landlord and owner zero access? Maybe places like the Socialist Republic of California allow this kind of crap, but most states have common sense, plus reasonable tenant and landlord protections. Yeah, the whole feel of this makes me think there’s something very wrong going on inside this house.

 

I can imagine your frustration, Tracy. It makes me angry just thinking about it. If they’ve got a sick child or adult in the home, or someone’s out of work but actively looking for a job, then I’ll show a lot of compassion and back off a little. I’ll try to work with them to resolve things in a way that’s good for everyone. But if they’re just playing games or misbehaving and using COVID-19 as an excuse on top of that, I’d have no problem removing them.

 

I think you need to dig a little deeper on this one. Check the current laws in South Carolina, especially any laws concerning a possible eviction moratorium and get in touch with a good real estate attorney. There are times when we’re called upon to be understanding and generous. But I have very little tolerance for someone who tries to take advantage of me.

 

— 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 20 million listeners each week. He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business, and 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.

And Baby Makes Three

 

Dear Dave,

 

My wife and I are expecting our first child in a couple of weeks. I bring home $35,000 a year teaching at a local high school, and she just completed her master’s degree in speech therapy. She has a job waiting for her after the baby is born, and they are being very flexible about when she starts. I have heard you tell some people to leave just $1000 in savings for Baby Step 1, and use any other saved cash to pay off debt. But I am concerned about the new expenses we will have once the baby is home. Should we hang on to our savings, so we have extra cushion for those costs or if something unexpected happens?  

David

 

 

Dear David,

Congratulations! I know you two are excited to welcome a little one into the world.

 

In your situation, I’d advise pushing the pause button on the Baby Steps for now. Forget about paying down debt, until mom and the baby come home, and you’re sure everyone’s healthy and safe. You could even hang on to it all until she decides to start work. But the bottom line is if everybody’s okay, the baby and all those connected expenses—like formula, diapers, and daycare—just become part of a regular monthly budget.

 

Your wife is going to be making pretty good money once she starts her job. And the truth is babies are not all that expensive. There are costs involved in having kids, but it’s not like we’re talking thousands of dollars a month out of your budget just because you had a baby. Can you buy lots and lots of things for a baby? Can those things cost a ridiculous amount of money? Of course! The list of things you could buy goes on and on. But a healthy, new baby doesn’t need much, and having one at home isn’t going to break the bank.

 

I think any financial fear or uncertainty you may be experiencing right now will disappear once you’ve got a couple months of adjusting your budget and getting used to the new normal under your belt. Then, when you and your wife decide it’s time to start her career, you can begin paying off debt in a really big way!

 

—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.

 

Does My Mom Need Long-Term Care Insurance?

 

 

Dear Dave,

 

My dad passed away about a year ago, but he left my mom in really good shape financially. They never had any consumer debt, the house is paid for, and they had about $1 million in assets. Dad also left her a $500,000 trust. Mom is going to be 60 next year. She is in good health, but considering her age and financial situation, do you think she needs long-term care insurance?

 

Darby

 

Dear Darby,

 

I’m so sorry to hear about your dad. Losing a spouse, or a father, is tough at any age. The good news is your dad did a great job of planning to take care of your mom. He left her in fine shape money-wise, but yes, she needs long term care insurance and a good estate planner. You need to help your mom do everything possible to handle her situation wisely.

 

I usually suggest folks wait until age 60 to buy long-term care insurance, because the likelihood of filing a claim before then is very slim. In fact, about 95% of long-term care claims are filed for people over 70. That’s why, in most cases, it doesn’t make sense to get long-term care insurance earlier than age 60.

 

Insurance isn’t a one-size-fits-all kind of thing, though. If someone has a family history of illness or other health issues at a younger age, they may need to get long-term care insurance earlier. But you shouldn’t buy long-term care coverage at a young age just because you’re paranoid of what might happen, or because you think you’ll save money. That’s just not true.

 

In the event your mom becomes unable to take care of herself at some point, long-term care insurance would be an absolute necessity. The cost of nursing home care these days is astronomical. Again, your mom is in a great place financially, but a prolonged stay in a nursing home somewhere down the road could eat up her nest egg in a hurry.

 

Long-term care insurance is a wise part of any good asset management plan.

 

—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.

 

On Air Now

Fox Sports Radio
Fox Sports Radio
12:00am - 5:00am
Fox Sports Radio

Weather

Submit Items For Tradio!