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Dave Says

Remember, You're A Team

 

 

Dear Dave,

 

Earlier this month, my husband and I both were laid off from our jobs within a few days of each other. The layoffs were not our fault. The company is letting several people go as a cost-cutting measure. We cashed in an annuity because our finances have been tight, but the good news is he began training for a new job last week. We don’t have children, so I am interviewing or filling out applications every day. Should we use the cash from the annuity to live on until things are stable again, or should we use it to pay off debt?

 

Anjanette

 

 

Dear Anjanette,

If you haven’t done so already, contact your creditors and explain what happened. Let them know the layoffs weren’t because either of you did anything wrong, and that you’ll get current with them as soon as possible. This is a scary situation you’re facing, so make sure you two keep the lines of communication wide open and encourage each other while you’re solving this problem.

 

The good news, though, is it sounds like things may be looking up. Support your husband all you can as he takes on his new job, and make sure you continue looking for work, too. A little extra money never hurts, so temporarily taking on a part-time gig while you’re looking for a permanent position isn’t a bad idea, either.

 

Of course, you need to be honorable and pay your debts if possible. But that may have to be put on hold for a while. Right now, the important thing is keeping food in the house and the lights and heat on. Hug on each other, stay determined and keep each other’s spirits up. You’re a team, and you’ll get through this.

 

Always remember, too, that prayer’s a good thing.

 

— Dave

 

 

* Dave Ramsey is an eight-time 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 Know He's Your Dad, But It's His Responsibility – Not Yours

 

 

Dear Dave,

 

My husband and I just heard of your plan. We are excited to learn more about money, and we have already saved up $1,000 for our beginner emergency fund. Right now, we have a problem. My father has never taken his finances seriously, and the other day he asked us for $400 to pay his cell phone bill and overdraft fees at his bank. Even as an adult, he would go to his parents regularly before they died asking for money when he always had a good job. Giving him the money right now would make things really tight for our family, and we don’t want to lose the ground we have gained where our finances are concerned. Do you have any advice?

 

Brooke

 

Dear Brooke,

 

Way to go! It makes me to happy to hear folks so charged up and on fire to get control of their finances. You won’t regret the decision.

 

I’m going to be straightforward with you, ok? You and you husband need do the right thing, no matter how dad reacts to this. And the right thing, right now, is taking care of your family first and not putting your finances in jeopardy. If I were in your situation, my answer to dad would be no.

 

I understand there’s a feeling of obligation to help your father. But it sounds like dad needs to learn a lesson or two about life and money. When you say your dad is irresponsible with money, handing him more of it won’t help. It would be like giving a drunk a drink. On top of that, it will reinforce the idea he can continue being dumb with money and there will be no consequences.

 

Trust me, I understand the emotions involved in helping out a parent. If you feel this is a situation where there is literally no alternative, I’d suggest making the $400 contingent on your dad beginning—and successfully completing—a good financial counseling course. Whatever you do, be gentle and respectful when you talk to him. And make sure he understands it hurts when you see him struggling.

 

But let him know, too, it’s his responsibility to work through his bills and take care of his finances.

 

— Dave

* Dave Ramsey is an eight-time 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.

Managing A Friend's Will

 

 

Dear Dave,

 

Our next-door neighbor was an older single man with no family, and my wife and I always tried to look out for him and help with things. He died recently, and in his will, he left us his home, his car and the money he had in his bank account. The will was handwritten, and it said the house was worth around $350,000, with $150,000 left on the mortgage. The car is worth about $10,000. Officials at our county office building said the money in the bank account wouldn’t have to go into probate since I was listed as the beneficiary, and I was given a check for that amount. We’ve just never handled anything like this before, and my wife and I were hoping you would help us navigate things.

 

Steven

 

 

Dear Steven,

 

There are a couple hundred thousand dollars in equity involved here. The fact that the will is handwritten doesn’t necessarily invalidate it, but it does increase the possibility of encountering some bumps down the road.

 

I’m not a lawyer, so the first thing I’d do is talk to a couple of probate attorneys in your county. Find out what they’d charge to handle things. I wouldn’t spend thousands of dollars to get this done, but I would pay $500, maybe $1,000, to let someone who knows what they’re doing handle things. If your county affairs people are right and everything’s easy and straightforward, it’s not a lot of legal work for an attorney.

 

On top of that, if the attorney you work with knows folks at the courthouse and is familiar with how things work there, then it’s kind of like traffic court, you know? It’s almost automatic. I mean, we’re only talking about three assets here—a bank account that’s already been handed off, a car and a house that’s mortgaged. For me, it’d be worth a little money to have someone on my side who knows the path through the woods.

 

I’m sorry to hear your friend and neighbor passed on, Steven. But I hope I’ve been able to help.

 

— Dave

Dave Ramsey is an eight-time 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.

I'll Be Nice, But I'll Tell the Truth

 

 

Dear Dave,

 

I’m 32 and a teacher. My house is my only debt, and there’s $55,000 left on my mortgage. My parents always taught my brother and I about saving and being smart with money. The other day, mom and dad offered to pay off the rest of my mortgage by loaning me the money with a very small interest rate. I know you don’t like the idea of mixing money and family, but considering I have a great relationship with my parents, what do you think about this offer?

 

Lacy

 

Dear Lacy,

 

I’m going to make a suggestion before saying don’t do this. See what I did there?

 

But seriously, I’d recommend they just make the money a gift and reduce your portion of any later inheritance by that amount. By doing this, you could help reduce the possibility of your brother feeling slighted in any way.

 

I would never loan my kids money. And here’s why: One hundred percent of the time, the Bible says the borrower is slave to the lender. That doesn’t exempt parents and their kids. No matter how nice your masters are, you’re still a slave in this kind of situation—and you’ll feel it. Family dinners and get-togethers are different when you’re sitting down to eat with your masters—your creditors—instead of just good ol’ Mom and Dad.

 

Don’t get me wrong, I’m not suggesting you should act ungrateful that they offered a loan instead of a gift. It’s a generous thing either way. But if they don’t want to go the gift route, that’s fine. You have a good job, a nice home, and you’ll be okay. The thing is, I just wouldn’t want to take a chance on straining a great relationship—or even ruining it—because of money.

 

Lacy, you’re 32, a teacher and a homeowner. In my mind that says a lot about you, your maturity and your work ethic. That being the case, I get how this could be a weird thing for you to do. So, I’m going to give you an out: Blame me. Just tell them you talked to me, and I said don’t do the loan idea. Tell them I gave you the make-it-a-gift-tied-to-the-inheritance idea.

 

If your mom or dad wants to talk to me about things, that’s fine. I’ll be kind to them. But I’ll tell the truth like I always do.

 

— Dave

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

 

Wait Until the Time is Right

 

 

Dear Dave,

 

Is it even worth it to buy a house these days? I’ve always been told buying a house is the adult thing to do and that it’s a great investment, but I can’t find anything decent and livable in my area for less than $350,000. My wife and I are debt-free, and we’re expecting our first baby in January. I was hoping to get your advice.

 

Craig

 

Dear Craig,

 

I can understand how things might feel a little hopeless in your current situation. You’re probably feeling the weight of the responsibility a new life brings to the picture. Things are getting real really fast, aren’t they? Believe me, I get it.

 

The truth is you may not be ready to buy a house today. And that’s okay. Having a new baby on the horizon doesn’t mean you have to run out and buy a home. That little boy or girl isn’t going to know the difference between a house and an apartment for a long time. Right now, giving your child a safe, loving environment is the most important thing.

 

Now, looking down the road, is owning a house worth it? Yes. But it’s not worth doing it at the wrong time or in a stupid way. You first need to make sure the income is there. Then, you need an emergency fund of three to six months of expenses in place along with a strong down payment. So, what if you don’t buy a home for another two or three years? Home buying should always be done with patience and wisdom.

 

There are two or three things that make buying a home a great long-term investment versus renting your whole life:

  1. Rents go up every year. If you lock in a good, fixed-rate mortgage, that payment will stay the same.
  2. The value of your home will increase. When you rent, you don’t own your residence, and you won’t benefit from the value of it going up.
  3. Our study of 10,000 millionaires showed that most say two things were integral parts of their ability to build wealth: Good retirement investments and a paid-off home.

A house is a great wealth-building tool, and it can also stabilize the biggest line item in your budget—housing.

 

God bless you guys, Craig!

 

— Dave

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

A Travel Agent for Guilt Trips

 

 

Dear Dave,

 

My dad and his wife asked my husband and I for $55,000. They want the money so they can pay off their debt. We’re debt-free and have a net worth of between $2 to 3 million, but we’re also retired. We don’t keep that much in the bank, so we’d have to draw from our retirement accounts—which is something we don’t want to do. They’ve already approached other family members about this too. His wife is owed money at some point from a family settlement, but they don’t want to wait that long. My dad said we should do this if we want them to get ahead and have anything left in their later years. My dad is 80, and his wife is in her late 70s. My husband and I are both in our 50s. Please tell me how to handle this.   

 

Karla

 

Dear Karla,

 

In their later years? I’m not trying to be mean, but they’re already in their later years.

 

I’m really sorry you’re in this situation. Even though you’re in your 50s, he’s still your dad, and I know this hurts your heart. It’s probably even tougher to accept the fact that he’s being manipulative. I mean, seriously. What dad calls up his daughter with the idea he’s entitled to $55,000 of her money and starts acting like a travel agent for guilt trips in the process? That’s just wrong.

 

Look, if the relationship and the situation were different, we might have something to talk about. With your net worth, you’re not going to miss $55,000 out of $2 to 3 million. In a good relationship, I’d help my mom or dad like that in a heartbeat—just to help them out because they’re older. But this situation already is what it is. Something tells me this isn’t the first time he’s behaved in a manipulative way. And if you say yes to this, then I’ve got a feeling it isn’t the first time you’ve caved into him. I’m worried you won’t be able to live with yourself if you do this, and that it may cause a big rift between you and your husband.

 

It’s wrong of your dad to treat you this way and put you in this situation. If you want to tell him your money’s tied up, which it is, or you just don’t like the way it feels, that’s fine. But my advice is to try to step back from the emotions and come to the realization in your own head that no is a complete answer.

 

You don’t have an ethical or moral obligation to give manipulative people money just because they’re related to you.       

   

— Dave

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

Are Debit Cards Safe for Online Purchases?

 

 

Dear Dave,

 

I use a debit card for all my regular, day-to-day purchases. However, I use a credit card for plane tickets, big ticket items, or when I shop online because someone told me it’s easier to dispute purchases when they’re made with a credit card. Are you putting your checking account at risk by using a debit card for these types of purchases?

 

Wendy

 

Dear Wendy,

 

I don’t know who this “someone” is, but they’re a lousy financial advisor. The firm of Someone, They Said, and I Heard? That’s a financial planning company you don’t want to work with.

 

A debit card has the exact same protections for fraud that a credit card has. It does come out of your checking account, but the bank has to put it back once you dispute the charge and prove your dispute. It may take a day or two, but they’ll get it done.

 

I’ve used a debit card for decades, and I haven’t owned a credit card since way back in my dumb-with-money days. I’ve never had any problems using a debit card, and I’m not going to make the mistake of playing around with debt ever again.

 

I hope you won’t either!  

 

— Dave

Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

A Church Car? You've Got to Be Kidding!

 

 

Dear Dave,

 

My mom took out a Parent PLUS loan in 2009 to help pay for my college education. I also took out $70,000 in student loans myself. My mom never made a payment on the loan she took out for me, and now the amount due on the Parent PLUS loan has ballooned to $100,000. She recently told me in her mind it was my loan in her name, and I should be the one to make the payments after I became financially stable. Thankfully I just got a new job making $140,000 a year. With this I can finally make a dent in my own loans, but she asks me every week if I’m going to pay the Parent PLUS loan. My mom is a nurse practitioner, so she makes good money, but she recently financed two new luxury cars within 24 hours of each other—one for work and one for church. She also has loans out from borrowing on her 401(k) and credit card debt. Should I take over the Parent PLUS loan under my name? 

 

Tommy

 

Dear Tommy,

 

Wait, are you serious? Your mom has a church car? I’ve never heard of such a thing. But hey, I’m going to talk to my wife about this. I knew I needed another car, I just didn’t know I needed a church car. Oh, my goodness!

 

Ok, here’s the deal. If you had an agreement with your mom, or promised at any time to pay back the Parent PLUS Loan when you were able, you should cover it. But that’s not what you told me. It sounds like your mom has a good heart and was just trying to help, but she did it in a dumb way. From what you told me, she’s done a lot of dumb things with money.

 

Under no circumstances do you take the loan back under your name. In fact, I’m not certain you can even do that with a Parent PLUS Loan. You need to get your debt cleaned up first before trying to help her. If you choose to be a bigger help after that, you need to start things by having a serious conversation with your mom. She needs to hear that she’s being absolutely silly with her money. Let her know you’re willing to help because the loan was for your benefit. But make sure she understands you won’t pay it all, and you won’t do it while she’s making two luxury car payments—including one on a church car. That’s ridiculous.

 

Offer to be her biggest cheerleader, and help her find a good financial coach—someone with the heart of a teacher. You might want to let her know you’ll match whatever she pays toward the loan, so it’ll feel like a team effort. But also make sure she understands if she pays nothing in any given month, you’ll match that, too.

 

Good luck, Tommy!   

 

— Dave

 

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

Being Hounded Isn't the Issue

 

 

Dear Dave,

 

I lost my job a couple of years ago. As a result, I ended up in about $25,000 of debt through credit cards and a consolidation loan. Now I have a great job making more than I’ve ever made before, plus a car loan for about $13,000. The older debts went to collections, but I’m not being hounded by collectors at this point. I want to get control of my money and do things the right way, so how should I handle things? 

 

Mike

 

Dear Mike,

 

Well, being hounded isn’t the issue. Morally, you owe the money. You took money under agreements that you’d pay it back, and that means you need to pay it—both the old and new debts.

 

I’d start by running two debt snowballs. Let’s do one for the car and any other active debts you have first since the collectors aren’t after you about the old, dead debt. Then, smallest to largest, start knocking out the debt that’s in collections. When it comes to these guys, reach out and get an agreement in writing detailing exactly how much you owe and the monthly payment amounts. Remember, do not give any of these folks direct access to your bank accounts.

 

There’s no upside to not paying what you owe. It’s an integrity issue, it’s a legal issue, and it’s a credit issue. Did I mention it’s an integrity issue, Mike?

 

You want this stuff out of your life. If you don’t take care of it, I guarantee it’ll come back to haunt you somewhere down the road!

Dave

Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

Don't Buy Until the First One Sells

 

 

Dear Dave,

 

My wife and I are looking to move from Washington, D.C., to Greenville, South Carolina, in a couple of months, and then sell our current home in February or March after she gets things wrapped up with her job. We are a little worried, though, because of all the things we’re hearing about the housing market crashing. Could you speak to this, please?

 

Nick

 

Dear Nick,

 

Your emotions and things you hear can creep up on you. I get that. But the fact is, there are still four buyers out there for every house that’s up for sale. Now, are the buyers and the market as active and frenzied as they were several months ago? No. But you have to remember, the last couple of years have been crazy-strange times for the housing market.

 

I’ve been in the real estate business since 1978, and I’ve never seen anything like it. Usually, it takes about 90 days to sell a house. You’ll get some offers, and none of them will be at full price, but everyone will have time to think about things. That’s normal, and it’s probably a lot closer to how things will work themselves out for you now in Greenville.

 

But in any economy, my advice to you would be don’t buy another house until yours has sold. If you end up with two house payments and your old house is sitting empty while you’re having to pay for the mortgage, taxes, utilities and all the upkeep to make sure it’s ready to show, you’re going to become what’s known as a motivated seller. I don’t want you to just give it away, but you’ll need to be very careful to make sure the timing on this deal makes sense.

 

Personally, I wouldn’t buy another house until the first one sells.    

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. 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 regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

 

Remember, Everyone Makes Mistakes

 

 

Dear Dave,

 

I am on Baby Step 2 of your plan, and I am about four months away from being debt-free. My younger brother is a good person, but he is very careless with his finances. He is always asking to borrow money from me. I don’t want to be mean or damage our relationship, but what is the best way to respond to a sibling who continually asks for money?

 

James

 

Dear James,

 

Honesty is always a good thing. If I were in your shoes, I’d just tell him the truth. Sit down with him, and have a friendly—but real—conversation where you let him know you’re working hard to get out of debt and don’t have any cash to spare. Explain that you’ve decided being in debt is dumb, you want a better life and that you don’t plan to borrow or loan money anymore.

 

You’ve got to look at the big picture in situations like this. You’re not helping someone if you participate in their misbehavior with them. Sometimes, especially when it comes to family, you have to love someone enough to tell them the truth. And in some cases, that can mean saying no and telling them to grow up and get their act together.

 

You’re not responsible for your brother’s reaction to all this, James, but you can control your words and use them in a caring manner. Do this with a kind spirit, and remember we all make mistakes. He may take it well, or not so well. But you’re not really helping someone who’s immature or irresponsible with money when you give them cash. At that point, you’re an enabler. It’s like giving a drunk a drink.

 

God bless you, James!

 

— Dave

* Dave Ramsey is an eight-time 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.

Honesty Is A Necessity

 

 

Dear Dave,

 

After hearing you talk about financial infidelity, I have to admit that I hide money from my husband. I have been setting aside money for emergencies without his knowledge. He is not terrible with money, but he always seems to find something to spend it on. Before I started doing this, we never managed to save much money at all. But now I feel like I have been doing something wrong. What should I do?

 

Lana

 

Dear Lana,

I believe in saving up for emergencies. I mean, I’m the guy who tells people to have three to six months of expenses saved in an emergency fund, right? But deception is never a positive thing in a relationship—especially a marriage. You need to talk to your husband about this.

 

I know it won’t be easy for you, so you have to make sure you tell him in the right way. Playing the blame game won’t help. Basically, you’ve been deceiving him about this. Sure, it sounds like he has been immature when it comes to your household finances, but you made the decision to hide things. You chose to do this instead of talking to him about your concerns.

 

Let’s start here. Tell your husband you need to talk to him about something important, and sit down together with no distractions. Explain what’s been going on, and that you’re sorry for not being honest about things, but you also need to speak up and tell him why you were doing this secretly. If you were afraid to disagree with him, tell him that. Tell him why, too, and let him know you just want the two of you to have a successful financial future, and that you’re committed to never hiding things again.     

 

Managing money in a marriage isn’t a “his” or “hers” thing. It’s a “we” thing. You can fix this, but it’s going to take some honesty, understanding and making an effort to work together toward the same goals—like saving or living on a written, monthly budget.

You each have a vote, but it also means you have to stand up and vote no, Lana, if he wants to blow money on silly stuff when you guys don’t have your finances in order.

 

— Dave

* Dave Ramsey is an eight-time 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.

Help! I'm Behind On Everything

 

 

Dear Dave,

 

I need help. I am way behind on my basic utilities and my taxes. I have tried to start the Baby Steps, but everything is so overwhelming right now that it is easy to get discouraged. I am 33, I live in Los Angeles, and I average around $30,000 a year doing behind-the-scenes work in the entertainment industry. My total debt is about $10,000. Can you give me some advice?

 

Cameron

 

 

Dear Cameron,

 

I know you’re in a scary place right now, brother. But I’m glad you’re getting on board and that you want to move in the right direction with your finances.

 

Before you start the Baby Steps, you should get current on all your bills. Make a list of all the bills you’re late on and how much it will take to get current on each one. Then, create a written, monthly budget. Once that’s done, and all your expenses and income are accounted for, you’re going to squeeze every penny you can from there and work your late list from smallest to largest until everything’s current. You’re going to feel a sense of relief—and accomplishment—every time you flip one of these bills. And believe it or not, the act of simply making a list will help reduce the stress you’re feel, because just by doing that you’ve established the size of the dragon. This dragon must die, and you are the knight who’s going to kill it.

 

But listen, there are two sides to this equation—income and outgo. No offense, but $30,000 a year as an income in Los Angeles stinks. You’ve got to do something to make more money. Hey, $10,000 would literally change your life. Not everyone can say that. The bad news is, you’ve got $10,000 worth of debt. The good news is, you’ve got only $10,000 worth of debt. I’m not talking about some little minimum wage deal, either. I want you making some real money. Don’t do anything illegal, or something that would compromise your morals, but get after making some good money.

 

And long term? Dude, you might want to think about taking a step up in your industry or even a full-blown career change. I mean, you don’t want to be making $30,000 a year and still working a side job when you’re 50, right?

 

You could be debt-free, and have a much better life, in a year or less, Cameron. Go do this.

 

I want you to win!

 

— Dave

  * Dave Ramsey is an eight-time 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 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 Them In The Loop

 

 

Dear Dave,

 

I am getting older, and health issues over the last year have made me begin thinking about selling my small business. I have spoken with a couple of potential buyers recently, and one of them seems to be the kind of person who would handle the company very well. How and when do I tell my employees about what is going on and what may happen?

 

Marjorie

 

 

Dear Marjorie,

 

In my mind, to be a good, effective leader you have to be willing to share and discuss things with your team—whether they’re good or bad. When talking to the folks at my company, I try not to get into a lot of unnecessary stuff, but if there’s any doubt, I’m going to over-share rather than leave them fearful, uninformed or confused.

 

Think about it this way. If the roles were reversed, and you were in their shoes, when would you want to know? If you’d worked for someone a few years, would you feel betrayed if you didn’t know about something like this? It might sound simple, but I think that’s a good, fair way to process the situation.

 

If I make a mistake with my team, it’s always going to be in terms of over-communication. I expect and trust them to be mature adults in the workplace, and they know this ahead of time. Still, I try to make sure I’m very transparent about how we’re doing as a team and as a company. No small business owner can be successful unless they have great people around them. Your team needs to hear that once in a while, too, in addition to knowing you’re always going to keep them in the loop and shoot straight with them.

 

Human beings just want to be treated with dignity and respect. They want to know what’s going on where they work. When it’s something that impacts their day-to-day lives—and potentially their livelihoods—they deserve to know the facts as quickly as possible.

 

— Dave

  Dave Ramsey is an eight-time 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 Take Lots Of Discussion And Planning

 

 

Dear Dave,

 

My wife and I are in our late-twenties, and we have a full emergency fund saved up. Our only debt is our home. We have talked about having a child sometime next year, but I am on the road three weeks a month for my job. I don’t want to be gone so much once we have a child, and I am thinking about opening my own business, so I can eliminate the travel and control my hours better. Do you have any thoughts on this situation?

 

Mike

 

 

Dear Mike,

 

An entrepreneur is the person I know who can go from sheer terror to sheer exhilaration and back every few hours. You’ve got to have a strong mind and a strong heart to be successful, plus there’s a good chance your idea won’t last long if you don’t love what you’re doing. Remember, too, you’re basically on straight commission as an entrepreneur, and there probably wouldn’t be a regular paycheck you could count on for a while.

 

Okay, that was a quick dose of reality. Now, if time and money weren’t considerations, what would you rather do—stay at your current job or run your own business?

 

My advice to anyone, entrepreneur or not, is to make sure your work falls in line with the passions, skills and talents you were born with. You don’t need to work in the construction business if you don’t like being outdoors and working with your hands, just like you don’t want to be stuck in a call center if you hate talking on the phone and being cooped up inside all day.

 

Everyone wants to be successful in their job, enjoy what they do and make lots of money. But personal happiness is just as important. If you wake up excited about what you’re facing every day, chances are you’ll be successful and happy. If you wake up dreading the day and your job, I can almost guarantee you won’t be successful or happy.

 

You’ve got a lot more thinking and research to do, Mike. There’s nothing wrong with wanting to change jobs or be an entrepreneur. Being able to spend more time with your family is a noble and worthwhile thing, too. But I’m not hearing a lot of direction in what you’re saying right now. Maybe work with a career coach, and spend some time tossing ideas around with your wife. I know you both want great things for your child, but you’re not going to make the best possible decisions for yourself—and your family—without a lot more planning and thoughtful discussion.

 

 

* Dave Ramsey is an eight-time 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.

Use That Momentum To Win!

 

 

Dear Dave,

 

We are ready to start Baby Step 2, and we have about $35,000 in total debt. Our two smallest debts, a credit card and a truck we financed, are both $4,500 right now, and we have a combined income of about $95,000 a year. Since the credit card has a higher interest rate, my wife thinks we should pay it off first. To me, the truck is a necessity, and we should pay it off first for that reason. What do you say?

 

Grant

 

 

Dear Grant,

 

When the rule of paying off debts from smallest to largest doesn’t apply, I think you should attack the one with the larger interest rate first. In your case, that’d be the credit card debt.

 

I get what you’re saying about the truck. And I agree that transportation is a necessity. You guys might be in a bind if something happened and you lost a vehicle, but it’s also a situation you could probably work around for a little while if you had no choice. My guess is you have friends or relatives who could loan you a car in a pinch, and public transportation is an option for some folks. So yeah, knock out the credit card first, then move on to the truck.

 

Do you understand my reasoning, Grant? Going this route serves two purposes: First, it will save you a little money. And second, I’ve got a feeling it will fire up your wife, and get her on board with the idea of you two getting your finances in order even more than she already is.

 

She’s taking this whole thing pretty seriously if she’s eyeballing interest rates, buddy. She loves the thought of you two having control of your money. Use this momentum to work together as a team, and knock out that debt!

 

— Dave

 

* Dave Ramsey is an eight-time 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.

Commission, Not Allowance

 

 

Dear Dave,

 

What is the right age to begin giving children an allowance?

 

Ben

 

 

Dear Ben,

 

In my mind, there’s never a right time to give kids an allowance. Instead, work out a plan to pay them commissions, and assign them age-appropriate weekly chores.

 

This can be done with very simple tasks starting at an early age. When the work gets done, they get paid. If they don’t do the work, guess what? They don’t get paid. This helps teach them a healthy work ethic, and it introduces them to the idea that work creates money. 

 

Simply giving kids money is a sure way to plant the seeds of entitlement in a young mind. You don’t want your kids growing up with the idea they deserve money simply because they’re alive. Of course, there are things kids should be expected to do without pay, too. When you’re part of a family, everyone needs to understand they have a responsibility to pitch in and help out sometimes!

 

— Dave

* Dave Ramsey is an eight-time 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 Many Years?

 

 

Dear Dave,

 

My husband and I are debt-free. We are in our mid-20s, we also have a full emergency fund and we each have 401(k) plans with our employers. Currently, we are looking at life insurance. We do not plan on having children, so what length term policies would you suggest for a couple in our situation?

 

Ashlie

 

Dear Ashlie,

 

I’d recommend you both find good 15- or 20-year, level term policies, with coverage amounts of 10 to 12 times your individual incomes. If you two have a change of heart, and decide you want kids later, I’d recommend converting those to 30-year term policies, still at 10 to 12 times your incomes. Why? You’d want the insurance to be there to protect everyone in the family until the kids are out on their own.

 

Between now and then, and in the years after, your continued saving and wealth building will lead you to a place where you guys are self-insured. And that’s a great place to be!

 

— Dave

* Dave Ramsey is an eight-time 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 Let Them Hook You

 

 

Dear Dave,

 

My wife and I just bought a new home, and we only need one or two more things to furnish the living room. Over the weekend, we found a couch and love seat set we both like for $3,000. The owner of the store said he would take 15% off the price if we get a store credit card and pay for it that way. We are in pretty good financial shape, and can afford to pay cash for the furniture, but what do you think about the idea of taking advantage of the 15% off offer, then paying off the card immediately and closing the account?

 

Jackson

 

 

Dear Jackson,

 

Playing with snakes is always a bad idea. Sooner or later, you’re going to get bitten.

 

Everyone thinks they’re the exception to the rule, or they’re somehow winning or getting rich by doing stuff like this. It doesn’t work that way. So, stop playing around with debt products. This guy’s just trying to hook you and make more money.

 

Your idea might sound good on the surface to a lot of folks, but the problem is the vast majority of those same people don’t have the discipline to follow through on a plan like this. Having that store account, even for a short period of time, would be too much of a temptation. Another issue is many places like this hit you with a fee when you pay off the card. They’ll fee you to death on other things, too, if you’re not careful, until you end up wishing you’d never even seen the place.

 

If it were me, I’d just talk to the owner again and let him know I’m taking my business elsewhere unless he discounts the furniture 15% on a cash purchase. There’s no way I’d take out a stupid credit card for a place like that whether I had the cash on hand or not!

 

— Dave

 

 

 * Dave Ramsey is an eight-time 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.

Which Is Best?

 

 

Dear Dave,

 

How do you know if a will or a trust is best for you?

 

Monica

 

 

Dear Monica,

 

This is a great question, especially since August is National Make-a-Will Month. The first thing you should do is take a serious look at your needs, your wishes and your overall life and financial circumstances.

 

If you’re like the average person with a couple of kids, a home and some savings, a will is all you need. There’s no reason to bring lawyers into the mix, unless there’s something complicated about your situation. In cases like this, you can even set one up online that’s perfectly legal in just a few minutes. 

 

If you’re older, your kids are grown and your estate is worth $1 million or more, a trust is the way to go. By doing this, you can avoid probate in a way that wills don’t allow. Now, if you have a large estate and dependents, having both a will and a trust is a good idea. And you don’t have to worry about the two bumping into each other. They’re separate legal instruments, and there’s generally no conflict between them. If there is a legitimate, legal conflict between them, the trust usually overrides the will.


Simply put, everyone needs a will. But not everyone needs a trust. Trusts can be more than you need, but they can also be a great tool if you have a larger estate. So, if you’re in the vast majority of folks who don’t need a trust, just get yourself a will. You’ll spend a lot less money and feel so much better knowing your stuff will go to the right people—and that your family will be taken care of!

 

— Dave

 

 

* Dave Ramsey is an eight-time 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.

Pay Off The Mortgages? Not So Fast...

 

 

Dear Dave,

 

My husband and I are retired. I receive a small pension, and we are both on Medicare and Social Security. We have about $25,000 left to pay on our mortgage, along with a second mortgage of $18,000. These are our only debts. We also have a nest egg of $30,000 set aside, and a small annuity that’s worth about $20,000. Would you recommend paying off our mortgages with our savings?

 

Jane

 

 

Dear Jane,

 

If you know me at all, you understand how much I’d love to see everyone in control of their finances and living debt-free. But being broke, even in a house that’s paid for, isn’t a good idea. Believe me, I understand. The idea of paying off the house and everything is awfully tempting. But if you two did that, you’d be left with very little. To me, that’s a scary thought when your small pension—along with Social Insecurity and Medicare—are all you have coming in.

 

No offense, but your nest egg is kind of small to begin with, so I don’t think I’d be raiding it right now. On the other hand, if you’d told me you had $400,000 or $500,000 saved up, I’d tell you pay off the house and second mortgage today.

 

If you’re not doing this already, I’d advise you two to start making and living on a regular monthly budget. Give every dollar a name on paper before the month begins, because if you don’t, your money will control you instead of you controlling it. Make sure you’re living on less than what’s coming in, and hopefully you can devise a plan to have the house and other debt paid off in a few years.

 

God bless you two!

 

— Dave

 

 

* Dave Ramsey is an eight-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 Different Kind Of Creditor?

 

 

Dear Dave,

 

My wife and I have plans to enter the mission field as soon as we have paid off our debt and get a full emergency fund in place. We only have about $12,000 in credit card debt left, and we don’t own a home, but my father does not want this debt to stand in our way. He has offered to pay off the credit cards, and make it a loan where we would pay him back over time. It is a tempting offer, but we both feel strange about accepting it. What do you think we should do?

 

Brandon

 

 

Dear Brandon,

 

Your dad sounds like a generous, good-hearted man. But considering the goal you and your wife have, I want you to think for a minute about the spiritual implications of a situation like this.

 

Proverbs 22:7 says the borrower is slave to the lender. Now, the Bible doesn’t say debt is a sin, but it definitely discourages debt, and it teaches us to live our lives differently than the rest of the world. That’s the case when it comes to handling money, too.

If you do this, you’d be turning your dad into your creditor in a very real sense. That’s going to make family dinners taste different, because you’ll be eating with your lender instead of just good old dad. Money has a way of changing the family dynamic, and it’s almost never for the good. Suddenly, you’re getting raised eyebrows if you buy something for yourself, because even the nicest, most generous folks have opinions.

 

If it were me, I’d say thanks, but no thanks. There’s no way I’d be in financial debt to my dad.

 

Now, if he were to offer to make paying off your debt a gift—one that was given with no strings attached to help you two get into the mission field quicker—I’d be okay with that and I’d be deeply grateful and honored.

 

But I would never tell you to go into debt to a parent. Your dad is probably thinking it’s better for you to be in debt to him rather than some uncaring bank or credit card company. But I just wouldn’t want to do anything that might jeopardize your relationship.   

 

— Dave

 

 

Dave Ramsey is an eight-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.

Help Them...And Help Them Get Help

 

 

Dear Dave,

 

I finished college a couple of years ago, and I have a good job making $65,000 a year. The only debt I have is about $5,000 remaining on a car loan, and I am paying that off as quickly as possible. At the same time, my mom and dad need repairs on their small house, and I am not sure they can afford to fix things. They both work hard, but they don’t make a lot of money. Plus, they have some debt. I have enough saved to pay for fixing their roof, with plenty left over. What do you think about the idea of pausing paying off my car to help them? 

 

Samantha

 

 

Dear Samantha,

 

You’re a caring young lady with a great heart, who’s also making good money. There’s no reason you can’t do both things. Help your mom and dad with the roof, then turn around and finish knocking out that car payment and re-build your savings. From what you’ve said, it won’t put you in a financial bind, right? I’m really proud of you for wanting to help your folks this way.

 

I know your mom and dad work hard. And they’re obviously good people to have raised a daughter like you. But I want you to think about one thing. If you make a habit of fixing their lives without them having a hand in fixing their lives, this scenario could become a nightmare for everyone.

 

I’d go ahead and help them, but the only way I’d do it is if they promise to let you help them address the reasons they don’t have any money—and if they agree to get financial counseling. I can tell you love your mom and dad a lot. And I’m sure they work too hard to be broke. I’m not talking about fussing at them or shaming them, I’m talking about sitting down and having a loving discussion about the issues and what they can do to start making positive financial changes in their lives.

 

The fact that your folks have worked their entire lives, and can’t come up with money for roof repairs on a small home, tells me something’s wrong. The fact that they don’t have any money is the symptom. The problem is they’ve made poor decisions and mishandled the dollars they earned. Even if you don’t make a lot, you can still have a little cash set aside for emergencies if you manage it well.

 

— Dave

* Dave Ramsey is an eight-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' Have To Change

 

 

Dear Dave,

 

Is debt consolidation a good way to get out of debt?

 

Erikah

 

 

Dear Erikah,

 

No, it’s not. Debt consolidation companies try to position themselves that way, but they don’t even come close to addressing or solving the real problem.

 

Here’s the big reason debt consolidation isn’t a good idea. It makes you feel like you truly did something to change your whole financial outlook when you didn’t. When you move things around, or suddenly have a lower payment each month, you end up thinking you’re making real progress. The thing is you didn’t do anything to address the actual problem—which is you.

 

I meet people and talk to folks on my radio show all the time who don’t quite grasp this. They’ll tell me they paid off all their debt by using a debt consolidation company or taking out a second mortgage on their homes. Well, the truth is they’re not debt-free. They didn’t do anything but shuffle the same old debt around.

 

Personal finance is 80% behavior, Erikah. When it comes to getting out of debt, staying out of debt and getting your finances into shape, you have to change your habits and behaviors with money. Interest rates aren’t the problem, and the number of payments you’re facing aren’t the problem. The problem is the person you see in the mirror every morning.

 

Until you change that person, and start living on a strict, written monthly budget and decide to kick debt out of your life once and for all, you’ll never make any real progress toward gaining control of your money!

 

— Dave

 

  * Dave Ramsey is an eight-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.

There's a Process Here...And It Works!

 

 

Dear Dave,

 

My husband and I have a beginner emergency fund set aside, and we’re working on paying off $30,000 in credit card debt and two cars in Baby Step 2. He would also like us to start putting money aside for a couple of trips and a few other things we have always wanted. This makes me nervous, because we have made so much progress over the last year in getting control of our finances, paying off debt and living on a budget. I understand wanting something to look forward to, but I would hate to see us slow down when we are doing so well. How do you feel about this?

 

Marie

 

 

Dear Marie,

Okay, so you have two car payments hanging over your heads, plus a bunch of credit card debt, and your husband wants to throw saving for toys and vacations into the mix? I’m sure he’s a good guy, and he has obviously been on-board with your financial overhaul so far, but I wouldn’t recommend doing this.

 

The reason people are successful following my plan is because I teach common sense methods, wrapped up in unbridled, scorched-earth intensity. There’s a process here. There’s an idea combined with passion. And when you plug into it full force, you’re going to move in a positive direction so quickly it’ll make your head spin.

 

You know how I say personal finance is 80% behavior and only 20% head knowledge? It’s true. Behaviors have to change. The more dramatically they change, the better the results and the faster you progress. But if you don’t plug into it, you’ll fall back into the same old things.

 

It’s okay to save up for a trip or buy some fun stuff in the general philosophy of life. But getting out of debt, and having control of your finances should come first. Remember when you were a kid, and you had to finish your dinner or clean up your room before going out to play? That’s what I teach. Work first, play later.

 

Trust me. It’ll pay off in the long run!  

 

— Dave

 

 

* Dave Ramsey is an eight-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.

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