Dear Dave,

We’ve been following your plan for a while. We’re debt-free, except for our home, and we have six months of expenses set aside in our emergency fund. Recently, I lost my job. I’m luckier than some, because received a generous severance package from my previous employer, plus my wife still has a good job. My parents always raised me to take care of things myself and not rely on others. I suppose it’s because of this I feel a little guilty about filing for unemployment compensation. Do you think there’s anything morally wrong with accepting unemployment benefits?

Brandt

Dear Brandt,

I really appreciate your self-sufficient attitude. I don’t know what happened at your last job, but I’ve got a feeling you’re a hard worker and a decent guy. I’m sorry you and your wife are having to deal with this kind of situation.

The Social Security system in this country is a mathematical failure. But that doesn’t mean I’m not going to take my money when I deserve it. The government took it from me in the first place, so I don’t have a problem with accepting something I’ve already paid into.

Now, I’ll throw out a warning here. Sometimes when people start receiving unemployment benefits, it causes them to take their foot off the gas. The idea that “free” money is coming in can help them rationalize sitting at home on the couch, instead of working hard to find another job and being extra careful with their finances. I’m not hearing that kind of mentality from you, though. And it’s obvious you and your wife have been pretty smart with your finances.

One more thing I’d suggest is making sure you look at your severance package as survival money only. Make a strict budget and stick to it. Cut out all excess spending. That means no eating out, vacations or anything like that until you’re working again and everything’s back on solid ground. Right now, focus on covering your Four Walls. By that, I mean food, utilities, shelter and transportation. Feed your family, keep the electricity on, pay the mortgage and put enough gas in the car to get where you need to go.

Everyone hits a rough stretch of road in life from time to time, Brandt. But you two are in a position to handle it better than most. Just remember what got you to such a good place with your finances in the first place. The discipline muscle is already there, and it’s strong. Just flex it, and it’ll help get you through this and back on your feet again!

— Dave

* Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

I was wondering if you recommend including future purchases, especially major purchases, into your monthly budget. If so, how far in advance should you do this?

Andie

Dear Andie,

When you wait until things go wrong or something breaks down, you’ll find yourself in a mess and the victim of your own poor planning. That’s why I’d start putting money aside in my budget as soon as I saw signs there would be a need for whatever item it may be.

Let’s say you’re pretty sure you’ll need a newer vehicle in a couple of years. Go ahead and start putting the money aside now. Decide on a reasonable, affordable ballpark price, then do the math to see how much you’ll have to save every month to make it happen. And if you can make it happen faster than two years? Great!

And remember, this kind of stuff is a whole lot easier when you don’t have things like car loans and credit card payments hanging around your neck!

— Dave

* Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

My wife and I are trying hard to get out of debt and start controlling our finances. We’ve always given our kids allowances in the past, but we’ve been considering putting their allowances on hold until we pay off our debt and get in better shape financially. What do you think about this idea?

Cody

Dear Cody,

I’m glad you two are making smart changes in your lives, but I wouldn’t stop what you’ve been doing where your kids are concerned. It can be a series of great teachable moments for them. I would, however, stop calling it an allowance. In my mind, there’s a victim mentality attached to word “allowance,” and that’s not something you want taking root in their minds.

Kids should learn at an early age that money is connected to work. Even a kid who’s in kindergarten is old enough to begin doing some age-appropriate chores around the house. So, let’s start calling it a “commission” instead of an allowance. Why? Because in situations like these shouldn’t be viewed as “allowing” them something. It should be looked at—by you and by them—as rewarding success.

My wife and I did this very thing with our kids as they were growing up. Each of them had a list of chores that were expected of them each day. If they did their jobs, they got paid at the end of the week. If they didn’t, they didn’t get any money.

Some people may look at this method and call it “tough love.” But it’s really not. It’s just love. It’s something you do when you’re trying to teach your children, and guide them toward becoming independent, responsible adults.

— Dave

* Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

My husband lost his job four months ago, and we’re close to losing our home. I’m working three jobs trying to keep our heads above water, while he’s “waiting for the right opportunity.” I understand his feelings, but at the same time I’ve been encouraging him to find a job like delivering pizzas to help out. Should we continue this way, or should I quit my really hard job, and just let him take responsibility? I love my husband, and I hate the idea of losing the house, but this is driving me crazy.

Janet

Dear Janet,

Many guys are task-oriented, and if they’re not careful, they can start defining themselves by what they do rather than who they are. So, when a guy, in particular, loses a job it can be a huge deal in his life and a massive blow to his ego.

When I went broke a few decades ago, I had to re-think who I was in my own mind. I’d lost my business, and in many ways, I looked at that company as who I was. My identity was suddenly gone, and lots of guys go through that very same thing with a job loss.

If he’s not willing to listen to you, I think you two need to sit down with a good, objective marriage counselor, because he’s confused as to why he works. There are two reasons we work. One is to provide for our families. That’s our primary job. The second reason is to exercise our calling—the reason we were put on this planet. But you can’t accomplish the second one when you’re not doing the first one. You’ve got to make sure your family has a place to live and food on the table. Four months of a guy sitting on his butt like this is unacceptable. I don’t want to hear about being over-qualified, or anything about a career path. Get a job and take care of your family! I don’t care if it’s cutting grass, shoveling snow or delivering pizza. In situations like this, you have to stand up, be a man and take care of your responsibilities.

I’m sorry if that sounds harsh, but it’s the truth. Believe me, I get it. Sometimes people go through problems, and they need a break of some kind to work through the pain. I did a little of that when I went broke. But at the end of the day, we didn’t lose our home because I was sitting around doing nothing. Even when I’d lost all my self-confidence, I still went out and tried to get things started again.

It’s time for your husband to stand up, brush himself off and make something happen!

— Dave

*  Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

I’m pretty responsible with finances, but my girlfriend is in a bad situation with her money and her career. She has a huge car payment, and lots of credit card debt. On top of this, it takes almost 40% of what she brings home each month just to pay rent, and she quit her job because she decided she didn’t like it anymore. She’s been floating lots of ideas, like filing bankruptcy or moving in with me. She thinks us living together will help her learn to be more responsible with her finances. I’m concerned that if she can’t handle her finances on her own, what will happen if we move in together? Your advice would be appreciated.

Dan

Dear Dan,

I can’t say if she’s technically bankrupt at this point. But for starters, she definitely needs to sell the car and find a cheaper place to live. I’m also not sure how long you two have been seeing each other, but this is someone to keep dating, not marry or let move in.

The hard reality is that bankruptcy’s not going to solve anything if she’s got a heart problem. By “heart problem,” I mean if she buys things thinking stuff will make her happy and living way beyond her means in the process. Lots of folks mistakenly think they are where they live or what they drive. Those are the kinds of heart problems I’m talking about. And it’s the way I was years ago before going broke knocked some sense into me. It wasn’t until then I realized I had to make some serious changes in my life.

Don’t get me wrong. What I’ve just said doesn’t mean this lady’s a bad person. It just means she’s got some growing up to do. And all the money matters aside, you don’t just up and quit your job without a solid plan in place unless there’s a serious matter of principle at stake, or you’re the victim of abuse or harassment. Leaving one job for another is fine. But the idea of suddenly deciding you just don’t like something, then walking away from it when you’ve got a bunch of financial obligations, is just plain irresponsible. You don’t jump off the dock until the boat arrives!

Again, I don’t know all the details behind her finances, but chances are she’s not bankrupt. There are some character issues in all this that need to be addressed, though. If it were me, I’d suggest she spend some time seeing a good financial counselor—one with the heart of a teacher. Then, you can act as her support system to help keep her on track, and encourage her to keep moving forward toward getting control of her money.

— Dave

* Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

I was talking to some friends the other day about wills and trusts. They seemed to have a variety of opinions, so can you straighten things out for me? I don’t have a will or a trust, and my financial situation is pretty simple. I just want to make sure I do the right thing.

William

Dear William,

This is a great question. I’m sure your friends are smart folks, but I’m glad you’re looking for more answers. I’m not a lawyer, so I’m just going to give you a few simple things to think about. Also, I’d strongly suggest you talk to an experienced will and trust lawyer, one with the heart of a teacher, who will give you all the facts and put your best interests first.

Basically, a will is a legal document that explains what you want to happen with your stuff when you die and puts it all in writing. There are many different types of wills, but for most people a simple will is all you need to establish a solid estate plan that protects your family if something happens to you.

Trusts tend to be geared toward people with more assets and unique or complex estate issues. They also come in lots of different forms like, living trusts, revocable and irrevocable trusts and special needs trusts, just to name a few. In my mind, if you have less than $1 million in assets—and your financial world is pretty simple and straightforward—a will gets the job done just fine.

One of the most important differences between wills and trusts is the ability to name a guardian for your minor children. You can name a legal guardian in your will, but you can’t in a trust. So, even if you have a trust, you’ll still need a will to make sure your kids are taken care of after you die.

Another important distinction between the two is that a trust lets you skip probate court—a will doesn’t. Probate court cases can drag on forever. Plus, they can be expensive. If your estate gets mixed up in probate court because someone challenges the will, it could mean your family has to spend months in court while grieving. No one wants to go through that. While we’re on the subject of probate court, let’s talk about another sticky subject.

There’s a little bit of crazy in every family. You probably know who they are in your family, but if you don’t, it might be you. Seriously, though, we all know some families that seem to have more than their fair share of crazy and drama, and wills are best for families that struggle with these issues and tension between family members. Probate court can resolve those problems. On the other hand, families who can handle healthy conflict, and who trust each other, are better off with a trust, since they don’t need a probate court to babysit them.

And if you’re wondering if you can have both a trust and a will, the answer is yes. In fact, most people who have a trust have a will, too.

I hope this little bit helps!

—Dave

*  Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave, 

How do you know when the time is right to buy a place and stop leasing? I’ve operated my own small business for three years, and in that time, I have leased the building that houses my company. Thanks for your help.

Jon 

Dear Jon, 

I’m a big fan of leasing the first few years after starting your own business. Now, it’s even better if you can work out of your home when just starting out. But I understand that depending on the type of business you’re running, that route’s not always possible. 

You should only buy a building when you have a really good idea exactly what your building needs will be, based on a solid track record. Growth in business is a good thing. But in some cases, you may want to hold off buying a building if you’re growing too rapidly. Don’t make the mistake of focusing too much on real estate, and not enough on generating revenue and managing your growth wisely. You’d also want to make sure you’re going to be in anything you buy for a while, because you don’t want to be stuck with a residual value—the remaining value of an asset after it has been fully depreciated. 

So, yeah. In the first three to five years of starting your business, it’s always a good idea to lease.?After that, and once your company has a proven record of success, you can think about leasing with an option to buy, or—in the right situation—buying a building.

Debt-free, of course! 

—Dave

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of The Ramsey Show. 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.

Dear Dave, 

How do you feel about someone buying a vacation home, then renting it out when they’re not there? 

Randall

Dear Randall, 

As long as you’re debt-free and buying with cash, I’m cool with it. A vacation home is a really nice “extra” as you start building wealth. It’s still basically a very large, very expensive toy. Still, it could become something of a money maker for you if you play your cards right. 

But here’s another side to vacation home rentals that most folks don’t consider. You might make some money, but there will almost always be several weeks during a year when it sits there empty. Chances are you won’t get rich renting it out, but if you’re talking about something that’s more of a plan to offset the annual costs of your toy, I don’t think you’ll be disappointed. 

Be ready to deal with lots of spills on the carpet and damage from your guests, along with general maintenance and repairs. There’s always something that needs attention when you own a property. But if you can handle all that financially and emotionally, I think you’ll be fine.

Best of luck, Randall! 

—Dave

* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of The Ramsey Show. 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.

Dear Dave,

I’ve made a lot of stupid money mistakes in the past. Even though I finally paid off six figures in debt a few years ago and am in control of my finances for the first time in my life, I’m having a hard time forgiving myself for all the dumb things I did. I have an emergency fund and other savings set aside, and I’m almost ready to buy a house. But it seems like there’s still a cloud hanging over my head from all my bad decisions. How do I stop obsessing over my past financial mistakes?

Brea

Dear Brea,

If you’ve had enough determination to pay off six figures’ worth of debt and to build savings on top of that in the last few years, you’re doing a phenomenal job! Most people would just make excuses or give up, but you educated yourself, put your head down and stomped out all that debt. I’m very proud of you, hon. What you’ve done speaks volumes about your character and self-discipline.

The late Maya Angelou once said, “Do the best you can until you know better. Then when you know better, do better.” That’s the key for you, I think. Doing dumb things doesn’t always mean you’re a dumb person. Sometimes, we just don’t have the knowledge or guidance we need to do things the right way. But once you learned a few things and saw there was a better way—a smarter way—you jumped in and made incredible things happen. You cleaned up your finances, and you changed your entire future for the better. I think that’s pretty cool. And you know what else? It makes you a pretty smart lady.

I think part of your struggle may be the fact that you’ve spent more time making the wrong decisions with money than you’ve spent making the right ones. That’s understandable. But time will help heal that struggle. It’ll distance you emotionally from the old you until you’re confident in the new you—not just in your actions, but in your heart and mind. I mean, think about it this way: If you violated trust with a friend, how would you rebuild it? First, it would take time. And second, it would take a series of trustworthy actions.

Let’s say someone had a drinking problem for a long time, but they’ve been dry for three months. After three months, their spouse still might not trust them with the checkbook. I totally get that. It’s a good start, but it’s not like they haven’t had a drink in three years. That’s where time comes into play. The more time they demonstrate a solid pattern of not going back to the bottle, the more evidence they create for why others should trust them.

I think you’ve developed a pretty good track record of being smart with your money, Brea. So cut yourself some slack. If God is willing to forgive us for the really bad things we say and do, you need to be able to extend a little grace to yourself for the dumb things in your financial past.

— Dave

* Dave Ramsey is a national bestselling author, personal finance expert and host of “The Ramsey Show,” the second-largest talk radio show in America. He has appeared on “Good Morning America,” “CBS Mornings,” “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 the CEO of Ramsey Solutions.

Dear Dave, 

I’m beginning to feel some bitterness and resentment towards my parents for their recent decisions and financial irresponsibility. Fifteen years ago, while I was still in school, they left good-paying jobs to enter the ministry. They both took pay cuts when they made this decision, and they’ve been regularly asking for money for living expenses from my husband and I ever since. Sometimes, they even try to make us feel guilty if we can’t give them the amount they ask for. My mom, especially, constantly brings up their call to the ministry, adding that we should want to help them. We believe in their calling, but we also feel they knew they would have to live on less money, and they’re being irresponsible with the money they make. What should we do?

Abigail 

Dear Abigail, 

What I’m hearing is giving money to your parents isn’t necessarily a financial hardship for you and your husband, but that by consistently giving or loaning your parents money you’re losing respect for them. This is not a healthy situation. Your relationship has become strained, and that’s a tough thing for anyone to deal with—especially in a parent-child scenario.

Make no mistake, going into the ministry with the right heart is an admirable thing. However, in the Bible, Paul made tents while he conducted his ministry. I’m paraphrasing, of course, but his line was to the effect of, “If you don’t work, you don’t eat.” He had a job. So, I don’t think suggesting your folks think about working outside the ministry while trying to do God’s work is unfair in a situation like this.

I’m sure your mom is a good person, but no one should do this to their child. On top of it all, she sounds like a travel agent for guilt trips—like she’s working you over while implying it’s all really for God. That’s not only toxic, it’s just plain wrong.

It’s going to be hard to unravel it all and turn this into a respectable situation where they’re not constantly asking for money, and you’re not feeling pressure and falling victim to the guilty feelings that enable this behavior. I hope all of you will consider sitting down with a reasonable, objective third party and talking things through. I also hope you’ll take some time to read a book called Boundaries by Dr. Henry Cloud. It will open your eyes to a few things.  

God bless you and your family, Abigail.

—Dave

  * Dave Ramsey is an eight-time 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

I’m 32 and debt-free, except for my house. My grandmother passed away a couple of months ago, and her will has caused problems for my family. I was her only relative living in the same town as she got older, so I looked in on her and helped take care of her, because she didn’t want to go into a care facility. In her will, she left everything—her house and property, along with about $300,000—to me. Some of my relatives said they deserve something. Two have even accused me of wanting everything she had and turning my grandmother against them. I don’t like what’s happening, but I’m not sure what to do. I never asked her for anything.

Jeffrey

Dear Jeffrey,

I hate it when things get ugly between family members, especially at a time when everyone should be pulling together and supporting each other. I’m sorry you’re going through all this.

Let me ask you a question. Did you love your grandmother? It sounds to me like you did. A lot! It takes a special person to step in and help the way you did. I think it’s pretty obvious she loved you, too.  

When a person dies, they can give their belongings to anyone they choose. It was your grandmother’s stuff, so it was her decision. Period. She could’ve spread it around among you and the rest of your family, but she didn’t do that. She had her reasons, and her final wishes were just that—her final wishes. No one in your family, even you, deserved anything from her.

I know this is a hard position for you to be in, Jeffrey. This has probably crossed your mind, so I’ll go ahead and say it. Generally speaking, it’s possible to transfer part of your inheritance to someone else even if it's not specified in the will or trust. Keep in mind, you might need to seek court approval for such a transfer, depending on the jurisdiction and specific family circumstances.

Or, you can let anyone who has a problem with your grandmother’s decision contest the will. Of course, one possible outcome of that is you might have to spend the money she left fighting them in court. The lady left what she left. There’s no more. It was her house, her property and her money. The others aren’t entitled to what she had just because they’re relatives or they want it.

If you go to church, I’d advise you spend some time talking to your pastor about the situation. You’ve got a lot of folks mad at you right now, and I think you might benefit from a few kind words and an objective point of view. I’d also recommend sitting down with a good financial planner—someone with the heart of a teacher—and talk about to best handle your newfound inheritance. Regardless of your decision, it’s always best to have a plan and be prepared.

In the meantime, don’t beat yourself up over this, son. You haven’t done anything wrong.

God bless you.

—Dave

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

My husband and I both work outside the home, and he has come up with an idea for our fun money. He wants us to set up an account where we both put 5% of our earnings for discretionary spending. The issue in my mind is that he would have a lot more to spend, because he makes much more money than I do. He says he feels he should be able to spend more since he makes more. I’m not a greedy person, and I don’t spend money on a lot of frivolous things, but I do think things would be even. I feel we should each put in the same dollar amount—one that’s fair to both of us—if we’re going to do this. What do you think?

Val

Dear Val,

This isn’t a good plan. I’m sure your husband means well, and that he’s really a good guy overall, but it sounds to me like he probably hasn’t thought this whole thing through. As they stand now, the details of his idea play out as pretty immature and selfish. And something tells me you wouldn’t marry a man like that.

Think about it this way. There are plenty of families out there where only one person works outside the home and generates an actual income. Would it be fair to say that whoever brings home the paycheck is the only one who can have fun spending once in a while? Of course, not! In most cases, spouses who don’t work outside the home take on tons of responsibility and accomplish several things every single day—especially if the couple has kids. If you put a monetary amount on all that, it’d wind up being a pretty nice income dollars-wise.

Remember back when you two got married? If it were anything close to a traditional ceremony, I’ll bet the preacher pronounced you two “as one.” As in every thing and every way. That means you have one income, a combined income, and it’s our income. If you own a home, it’s our home. It’s not more his home just because he makes more money than you. Our kids, our marriage our everything. Get the picture?

Marriage is not a me proposition. It should always be a we thing. Your husband needs to be reminded of that.

—Dave

  * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dave, 

My husband and I own a small business. We’ve been open for 12 years, and fortunately we’ve been very successful. We made the decision when we first opened to run the business debt-free. Along with that, we only accept cash, checks and debit cards for payment. Recently, we’ve had a client become very insistent that we start accepting credit cards. Our relationship with this client is becoming a little contentious over the issue. How should we address the situation?

Debra 

Debra,

Like we, as entrepreneurs, don’t have enough things to worry about every, single day, right?

As you might imagine, I have a bunch of people who are mad at me all the time because I don’t accept credit cards. But in my case, it’s not just a business decision. I teach people all the time not to use credit cards, and why they shouldn’t. So, I can’t very well go around encouraging folks to just swipe their credit cards when they buy from my company. 

For starters, that client is way out of bounds. It’s not their place to tell you how to run your business. But you’re lucky to only have one person getting pushy about the whole credit card deal. Everything about the credit industry today is out of control. But even though your case is a little different than mine, you have every right to not accept credit cards—especially if you have a moral or values-related issue with the product.  

As time goes by, you’ll probably have a few other people turn up their noses at the idea of not being able to pay with a credit card, but if you consistently offer great services or products at great prices, those experiences will only be a bump in the road. You don’t want to be argumentative when things like this happen, so maybe you can just smile, and let them know you always appreciate input from your clients.

I’m sure you and your husband work hard to make your business the best it can be. The fact that you’re still around over a decade after opening up shop is proof of that. You’ve probably realized, too, that being in business for yourself isn’t all sunshine and rainbows every day. Regardless, no one has the right to get in your face over how your business is structured or try to push you into doing things differently. Listening to, and evaluating, suggestions from clients only makes sense. It’s a smart thing for any business owner to do. But this one client is saying you should change a long-standing operating principle based on a whim—their whim.

And that’s not okay.

—Dave

 * Leadership and small-business expert Dave Ramsey is CEO of Ramsey Solutions. He has authored eight national bestselling books, including EntreLeadership, and is a host of The Ramsey Show and The EntreLeadership Podcast.

Dear Dave,

I’m currently on Baby Step 2 of your plan, and I’m six months away from being debt-free, except for my home. Recently, I’ve run into an issue with my sister, who has a good job, but continually makes poor choices with money. Over the last six months, she has also asked to borrow money from me and others in our family several times, including again yesterday. I don’t want to be cruel, but the whole issue has gotten out of hand. How do you think I should approach her about this?

James

Dear James,

Handling issues like this can be complicated, especially when family or friends are involved. But honestly, I think you should just tell your sister the truth. Keep it simple. Let her know you’re trying to get out of debt and change the way you handle your finances, so you don’t have extra money sitting around. Explain to her, too, that part of this is you’re not playing around with debt anymore, and this means you won’t be loaning or borrowing money again.

Make sure you do this with a kind spirit, James. Most people in your sister’s position already know deep down that they’re making bad decisions. So, it’s important that you talk to her in a gentle, caring way. See if you can get her to talk about what’s really going on with her money. You could even let her know you might consider giving her some money as a gift if you had any extra lying around—and you knew she was in control financially. But you’re not really helping someone who’s financially incompetent, or just plain immature, when you give them cash or even loan them money.

You’re not helping someone if you participate in their misbehavior with them, so you’ve got to look at the big picture in situations like this. Your sister hasn’t just hit a hard time, with lots of unexpected expenses or a job loss. Right now, her behavior with money isn’t just a bump in the road, it’s a lifestyle.

Sometimes you have to love someone enough to sit them down, and tell them the truth. Even if it’s family, that can also mean saying no and telling them it’s time to straighten up and start acting right.

—Dave

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions. 

Listen to the Ramsey Show weeknights 9 to midnight on WLVL 1340 AM and streaming at WLVL.com  

Dear Dave,

I own a small rental house, and for the most part my tenants have been conscientious people over the years. Recently, I learned my current tenant is subleasing the property for the short term as a vacation site. This kind of thing is prohibited in the rental agreement. He has always taken very good care of the place, so should I confront him about this, or just ignore it until it becomes a real problem? 

Karl 

Dear Karl, 

This may sound hardnosed, but it’s already a problem. He’s in obvious violation of the lease agreement. If it were me, I’d have a face-to-face talk with this guy today. I’d let him know how much I appreciate that he’s been a good, respectful tenant in the past, but the subleasing has to stop.

An agreement is an agreement. I have several rental properties myself, and I always try to be gentle and nice, but really clear about things. You may not have experienced any problems up until now, but what happens next time? If you don’t know and trust who’s in the house, you could end up with holes in the walls, ruined carpets and worse. On top of all that, what if they don’t have the money to fix things when they leave? It’ll be on you, because you lost control of your property. 

Again, be decent when you talk to this guy. It sounds like you two have a good history. But remind him he’s in violation of the lease agreement. And gently let him know if anything like this happens again, you’ll begin the eviction process.

—Dave 

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

How important do you feel identity theft protection is today? Should my husband and I buy it just for ourselves, or should we cover the kids, too? Lastly, where does identity theft protection fall in your Baby Steps plan?

Lanie

Dear Lanie, 

Unless you’ve gone completely off the grid, and have been there for a long, long time, there’s a good chance someone out there has a few of your numbers. Unfortunately, that’s all part of living in today’s world. Between consumer carelessness and data breaches—which have become an all-too-common occurrence these days—almost everyone has experienced, or will experience, some sort of identity theft during their lifetime.

So, yes. I recommend everyone have identity theft protection. I don’t really consider it part of the Baby Steps, because in my mind it’s like car insurance or life insurance, in that it’s something virtually everyone needs. And things like that should just be part of your regular monthly budget.

Good question, Lanie! 

—Dave

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

We sold our rental property recently. When we bought it, we thought it would be a good source of passive income. But owning it wasn’t passive at all. It got to the point where the work and hassle became too much. We have $240,000 from the sale, and we’re debt-free except for our home. We owe $140,000 on our house, and could pay it off instantly, but part of me wants to invest the proceeds from the sale of the rental property. Is it better to become completely debt-free at this point, or should we invest it so we can have even more money for retirement?  

Anthony

Dear Anthony,

You mean you had to actively manage your rental property? Listen, anyone who tells you real estate is passive income is full of crap. It’s a natural extension of the garbage people spout about how it’s okay to go into debt to buy real estate, because the renter is making your payments. No, it’s your payment. And when the renter doesn’t pay, or it sits empty, guess what? You have to pay it.

If you want passive income, buy an S&P 500 index fund. Set it and forget it. You won’t have to fix a leaky roof, replace worn out appliances or try to collect from deadbeat tenants. Real estate is a great way to invest, if you do it the right way. I love it. It’s anything but passive, though.

Let me ask you this about your situation. If you had a paid-for house, would you borrow $140,000 against it to invest? Of course not. It’s pretty much the same thing, and that would be dumb. Pay off your home, brother. Just pay it off. You’ll be debt-free, and you’ll still have six figures to invest.

I love that you’re thinking about the future, Anthony. And I know the compound interest you’re visualizing down the road is really tempting. Your compound interest calculator will tell you some amazing things, but what it’s leaving out is risk. It also can’t tell you about the carefree way you’ll walk, and how it’ll feel like a huge weight has been lifted off your shoulders when you don’t have a house payment. You’ll be able to live life on your terms, and all the decisions you make will come from a completely different point of view—one that isn’t burdened by the weight of bankers hovering around, waiting for you to give them what’s theirs.

The borrower is always a slave to the lender. Think about it. Only one implication of slavery is mathematical. All the rest are spiritual, physical, relational, emotional and mental. Being debt-free changes your life from the inside-out. Not only does it make your life better, but it allows you to give with incredibly generosity, and be an agent for positive change in the lives of others.

Pay off the house!

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

My husband and I have been very blessed financially over the course of our lives. We make a little over $200,000 a year combined, and we currently have a net worth of around $4 million. But what do you do when you’re not motivated by that kind of thing anymore? How do you find and live out God’s purpose for your life, when you’ve already had a better life than you ever expected? 

Amanda 

Dear Amanda, 

I can’t tell you what your calling is, but I can say this. There’s a lot of fulfillment and joy to be found when you’re doing something that serves the people and things in your life that matter most. 

If you’ve studied psychology a bit, you may remember something called Maslow’s Hierarchy of Needs. Basically, it says once your physiological and safety needs have been met, you begin to feel the need to find other things to motivate you. It sounds like you’re both hard-working, performance-driven people. I am, too. And people like us get our relaxation, and even fulfillment, away from work in different ways than most people.  

If I were in your shoes, I’d start trying to think about ways you can serve other people or causes you care about. Maybe there were dreams you had a long time ago, and you put them aside for your career. What really speaks to you right now, at this stage of your life? For you, if you have kids in the house, it might mean becoming a stay-at-home mom and really pouring yourself into them. It might mean starting an animal shelter, or providing meals for people who are homebound. Everyone has dreams, and everyone’s dreams are different.

It sounds like you’ve been thinking about this for a while, so here’s my advice to you. Take a day, or even a weekend, all to yourself. Get away from everything and everyone—any and all outside distractions—and think about your future self. Bring along things to eat and drink, a bunch of notepads, pencils and a Bible. Then, before you do anything else, take a deep breath, relax and pray.

From that point on, be completely honest with God and with yourself. Open up your heart and mind to things you care about and all the possibilities. You have to have a goal that’s worthy in mind, and that’s the one thing that’s missing. But a time of thoughtful prayer—and yes, even daydreaming—may just put you closer to an answer than you’ve ever been before.

Congratulations on your success, Amanda. You and your husband truly have been blessed. But now, it may be the time to become a blessing to others!  

 —Dave 

 * Dave Ramsey is a 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave, 

I’m in college full-time right now, and my parents have been generous enough to pay for some of my school expenses. In addition, they let me live at home while I complete my degree. I work some nights and most weekends so I can go to school debt-free, but I’m trying to figure out how to move out on my own and continue working, while remaining a full-time student and attending career-related campus events. The cost of living is high in our area, so I’m having trouble figuring out how to make it all work. Do you have some advice? 

Will

Dear Will, 

You sound like a very driven and mature young man. Congratulations on everything you’ve been able to accomplish so far. I’m glad you’re working hard in school with an eye toward the future. First off, out of the three considerations you mentioned—school, work, and cost of living—I think you need to decide which is your number one priority. If I were in your shoes, school would come first.  

Now, to go to school without borrowing money, you’re going to have to keep working. But finishing school on time, while attending some of the extracurricular events that will move you toward your career, might pre-empt work. You’ll have to work enough to pay for things, but if you can finish school and hit your academic and graduation goals while staying at home just a little bit longer? That sounds like a winner to me. It’s a pretty nice deal your parents are offering, but I can understand your desire to be out on your own, too. 

I want you to be out on your own as soon as you can, as well. But if you do that right now, you’re going to have extra bills and be forced to work even more. That’s going to throw your entire school process out of whack. Guess what your number one priority was in that scenario? Right, moving out. If it’s the tail that’s wagging the dog, it has become the number one priority. If it’s disrupting work, and thereby disrupting your academics, then in my mind you’ve put your focus on the wrong thing. 

Your number one goal should be finishing school on time, while attending as many connected events as possible. Meanwhile, keep working enough so that you’re able to continue doing all this debt-free. If that means you’re staying at home a little bit longer to pull it off, I’d do it! 

—Dave

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

My husband and I have our emergency fund account in the same bank as our checking and savings accounts. Do you think we should move the emergency fund to a different bank? A friend suggested doing this, but I wasn’t clear on why he thought this.

Shari

Dear Shari, 

Honestly, I wouldn’t worry about it too much if I were you. The only exception to that might be if you had loans you owed to that same bank.

Some commercial loan documents give banks the right to take money out of your accounts—without your permission—to pay the loan. This isn’t a common practice, and it usually doesn’t happen unless someone gets way behind on a loan. If you had a car loan with a particular bank, for instance, I wouldn’t keep a lot of money in that bank. 

But in your situation, Shari, I think everything’s fine.

—Dave 

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave, 

My wife and I have three young daughters. Is there a Baby Step for weddings? We didn’t see one in your plan, but I was wondering if it was included in any of the other Baby Steps. 

Cedric 

Dear Cedric, 

This is a really good question. I’m glad you’re thinking about the future and planning accordingly.

I don’t have a specific Baby Step for weddings. If I did, it would probably come after Baby Step 5, which is setting aside a college—or trade school fund—for your kids. Maybe you could look at it as Baby Step 5b. Once you have retirement, education savings and extra house payments underway, you could start putting aside a little something for weddings. 

Don’t get me wrong, weddings are special. You absolutely should mark these kinds of milestones with a celebration. But a wedding is only a one-day event. And to be blunt, a good education is more important than a fancy wedding. This idea may not make me popular with some folks, but it’s the truth.

Maybe this is the dad in me coming out, but if I had to choose between paying for more education and paying for big weddings, I’m going to pay for school every time. Besides, there’s no correlation whatsoever between the size and/or cost of a wedding, and the happiness and success of the marriage.

Good luck, Cedric!

—Dave

 * Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

My husband and I are following your plan, and we’re on Baby Step 2. We just learned that the person who has done our taxes for the last three years made mistakes on all our returns. They were really nice and did our taxes for free, but now we owe back taxes in the amount of $18,000. Since we’re still paying off debt, the only savings we have is the $1,000 in our beginner emergency fund. Should we take out a personal loan to take care of this, or set up payments with the IRS?

Laura

Dear Laura,

Take out a personal loan. Period.

Let this sink in for a minute. How often does Dave Ramsey tell people to borrow money? Almost never. Why am I doing it now, in this situation? Because the IRS is the worst creditor on the planet. They have almost unlimited power, which they use and abuse, and they have ridiculously high penalties and interest rates. With a personal loan from a local bank or credit union, you’ll at least have more input and flexibility in deciding the terms of the agreement.

Now, I don’t know about you, but if the person doing my taxes screwed things up to the tune of $18,000, I’d find someone else in a heartbeat. I understand you want to work with someone nice, and free is usually a great price. But in this case, free was not so free after all.

Just go to your local bank or credit union, explain the situation and see what you can work out. I always recommend small banks or credit unions over any of the mega banks. Places like Bank of America and Fifth Third just have no soul or empathy whatsoever. And the customer service at a credit union or small bank is a hundred times better than what you’ll find at a big bank. Sure, they’re still bankers, but there’s a human element in there. You’re not just a number to them like you are to the mega banks.

I hate debt, Laura, and I’m sorry you guys are in this situation. But 100% of the time, I’d rather have personal loan debt than IRS debt. In my mind, it’s the lesser of two evils.

— Dave

 * Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” the second-largest talk radio show in America. He has appeared on “Good Morning America,” “CBS Mornings,” “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 for Ramsey Solutions.

Dear Dave,

My mother died about a year and a half ago, and she left me and my younger sister $75,000 each. My sister is 16, and she plans on enlisting in the military after high school, then using the G.I. Bill to pay for college afterward. She won’t receive the inheritance money until she’s 18. What advice can I give her to ensure she makes good decisions with the money?

Davis

Dear Davis,

I’m truly sorry to hear about your mom. At the same time, I’m so proud of you for stepping up to help your little sister. You know, $75,000 sounds like a lot of money—especially to a teenager. But that kind of cash can disappear in a heartbeat if she’s not careful. And then, all she’d have left where her inheritance is concerned is a lifetime of regret.

If she’ll be smart with this money, and by that, I mean investing wisely and having a little bit of fun, she could end up a rich, little old lady one day. Not only that, but she can honor the memory of your mother and change her family tree forever. Her family will think differently, and be able to live differently, all because she had the maturity to not blow the money.

You said she’ll get $75,000, right? Think about this. She could just have fun with $15,000 or so, and invest the rest in good, growth stock mutual funds. If the stock market continues to average what it has since its start, she’ll be a multi-millionaire—and then some—by retirement. Even if I’m half-wrong on the math, the advice still stands. She’d have millions waiting for her. The point is that investing a big lump sum of money, and leaving it there for her golden years, is a great idea.

Now, I’m going to give you some homework, Davis. I want you to talk to a bunch of rich, old folks. Learn what they did to build wealth and hang onto it. Also, make sure the friends and family you both have around you are quality people—the kind who have your best interests at heart. Remember, the Bible says, “In the multitude of counsel there is safety.”

Your sister is very lucky to have a big brother like you. Walk her through this advice. Be there for her. Look out for her. She needs you right now, and she’ll need you in the years to come.

God bless you both!

—Dave

 *Dave Ramsey is an eight-time No. 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 Mornings, 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 the company, Ramsey Solutions.

Dear Dave,

A few years ago, I had a real problem with credit card debt. Since then, I’ve gotten much better at handling my money, and I’m making about $80,000 a year. Two weeks ago, I received a letter about a credit card I had in 2020. The amount owed is $7,688. The letter doesn’t say I’m being sued, but it says I have to appear before a judge in two months for a pretrial conference. I live in Florida, and I’ve never heard of anything like this. I only have $1,000 in savings.

Damari

Dear Damari,

I’m glad to hear you’re handling your finances better now than you did in the past. But at this point, you’re learning that old debts don’t necessarily die, aren’t you? Ignoring debts isn’t a good plan, because many times they come back to life like a zombie and come looking for you.

I’m not an expert on Florida law, but a pretrial conference in a case like this—over a $7,688 credit card bill—is highly unusual. I’ve been helping people with money problems for 30 years, and I’ve never heard of anything like this. It could be some kind of new tactic the collections attorney is using to try to intimidate you.

If I were in your shoes, I’d call the attorney who’s suing you and try to negotiate a payment plan or settlement. Do you have anything you can sell? Because I’ve got a feeling if you can come up with $3,000 or so and offer it as payment in full, they’ll take it. I don’t mean to be unkind, but these guys figure you’re a deadbeat because you’ve got a 5-year-old debt hanging over your head and haven’t tried to pay it. They’ll take almost anything they can get at this point.

In general, when you go to court over a situation like this, you’re going to lose. You have a legal debt, and you haven’t paid it. It’s that simple. So, if you don’t have anything to sell to make some money that way, you need to get busy working an extra job or two. I’m talking about doing Door Dash or something—in the morning before work or in the evening after work. Kiss those weekends goodbye too. Just go nuts for a few weeks, and make a bunch of extra money fast.

It won’t be easy, and you’re going to be dog-tired for a while. But you can scrape together $3,000–4,000 before June easily if you’ll just put your head down and make it happen. Then, offer it up to the attorney. Demand a written release, with the debt declared settled and paid in full, and chances are, this thing will be off your back!

— Dave

 * Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” the second-largest syndicated talk radio show. He has appeared on “Good Morning America,” “CBS Mornings,” “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.

Dear Dave,

My husband and I are in a bad situation, and we’re thinking about taking my parents up on their offer to move in with them. We both work two jobs. I’m a medical transcriptionist with a small business on the side, and he’s a warehouse clerk who is also trying to get a business off the ground. Combined, we bring home about $70,000 a year, plus we have $80,000 in debt between credit cards and a car loan. On top of all this, our rent went up 18% at the first of the year, and we can’t afford the increase. Should we move in with my folks?

Melissa

Dear Melissa,

I’m not opposed to families jumping into a situation together to solve a problem. That includes grown children moving back home for a short period of time. Sometimes, when the right people are involved (and proper boundary expectations are established and agreed upon), it can work out well for everyone. I just want you to be very careful that you’re not using a move like this to mask the real problem.

I’m going to shoot straight with you. The real problem isn’t an 18% jump in rent. The real problem is what that rent increase revealed about you both—the fact that you have weak careers. You guys are like two hamsters in a wheel right now. Neither one of you is afraid of work. That much is obvious. And you’re working four jobs between the two of you, so there’s no lack of effort. But you’re not gaining any traction. You’re not making a lot of money, and the debt hanging over your heads isn’t helping either.

Your parents are obviously good-hearted people, Melissa. If you do this, I want you, your husband and your folks to go into it with this mindset—your stay with them is a brief stopover on your way to prosperity. Don’t go into this—any of you—with an attitude of the world is mean, rent went up, and we can’t make it out there. This is a safety net, not a hammock. Use this time to begin addressing your financial issues, and take a long, hard look at your career and income situation. If you use this opportunity wisely, you can emerge in a better place with your money and with getting ahead in your careers.

God bless you all!

— Dave

  Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of The Ramsey Show, the second-largest syndicated talk radio show in America. He has appeared on Good Morning America, CBS Mornings, 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.