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.

Dear Dave,

My wife and I owe about $40,000 on our mortgage. My father-in-law, who is a very nice and generous man, said he wants to pay off the house for us, then let us pay him back over time. We’ve borrowed much smaller amounts of money from him in the past, and we were always able to repay it with no issues and no pressure. How do you feel about us taking him up on his offer?

Seth

Dear Seth,

I understand you and your wife have been fortunate in these kinds of situations over the years. And I know your father-in-law would probably be a lot easier to work with than a mortgage company when it comes to the size and frequency of payments. But I still think you’re playing with fire if you take him up on the offer.

I assume your father-in-law is doing pretty well financially, since he can afford to make this offer. But the downside is just too risky. If I were him, I might offer to pay off the mortgage as a gift to my daughter and son-in-law. But a loan? No way. There are no strings attached to a gift that comes from the heart.

Don’t get me wrong, Seth. I’m not bad-mouthing your father-in-law. What he’s making is a very generous offer, and it’s an incredibly nice thing to do.  But in my mind, a very important consideration is being left out of the equation, and it’s a spiritual issue. The borrower is always slave to the lender. Always. And sadly enough, nowhere is that more true than within a family.

Accepting this offer could bring instant discomfort into the relationship for you and your wife. This money situation is likely to hang over things like a dark cloud. Thanksgiving, Christmas and other special occasions will feel different—and kind of weird—when you’re suddenly celebrating with your mortgage lender instead of just good, old dad.

Even if you come from a reasonable, stable family, and it sounds to me like your in-laws are very good-hearted folks, this debt will always be in the back of your mind. But if you’re involved with a dysfunctional or controlling family, that tension is going to be right there—constantly.

I’d thank your father-in-law for his generosity and for the offer. But in my mind, it’s just not worth the risk.

— 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, 

I’m worried about my younger brother, and I need some advice. He’s divorced and has a son, and lately, it seems like he only wants to be a dad when it’s convenient. On top of this, he’s very irresponsible with money for someone in their thirties. Our mom and dad passed away several years ago, so I feel like this leaves me to be the big brother and parent at the same time. I’m not sure how to help him. Can you give me some advice, please? 

Andy 

Dear Andy, 

You’re a good and caring big brother to be concerned and want to help. And it’s a tough situation for you, especially with your parents no longer in the picture.

When I help people on my show, I have the benefit of them calling in and actually wanting help. These folks care about what I think, and in most cases, they realize things aren’t working for them. I don’t just walk up to people and say, “You know, what you’re doing is really stupid. Let me fix you.” I think that’s kind of the situation you’re in right now. So, before anything else, I’d begin to pray for him. Ask God to bring people into his life who will have a positive impact on him.  

One of the worst things about these situations is watching people you love do bad things to themselves and the people around them. Honestly, I don’t know there’s really a lot you can do without becoming the enemy to some degree. You can always try to hold him to a higher standard, and refuse to tolerate immature, irresponsible behavior when you’re around him. You might even look for opportunities to use yourself as an example. I’m not talking about puffing out your chest and pretending to be perfect. I’m just saying maybe point out areas in your life where you made mistakes in the past and how you fixed the problems. But going out and trying to actively intervene in his life without permission, or shaming him in hopes it’ll make him grow up and be a man, would probably do more harm than good.

Approach him in a gentle, caring way. Again, not like some know-it-all, but just let him know you care and you’re there to help if he’s having difficulties. Take him out to lunch once in a while, or invite him over, and let him know you’re there for him if he needs to talk.

And remember what I said earlier about prayer? Bringing God into the equation is never a bad idea.  

—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 been married for nine months, and we’ve been following your Baby Steps plan for three months. We have about $50,000 in debt, and I recently cashed out an old whole life policy that enabled us to pay off $22,000 of our debt. My wife still feels weird about us doing that, since the money paid off all the student loan debt she accumulated before we got married but none of the debt I brought to the marriage. I look at everything as ours, not mine and hers. What can I do about her sense of guilt and feeling indebted to me?

Anonymous

Dear Anonymous,

This isn’t an uncommon thing in situations like yours. But more than feeling indebted to someone or experiencing a sense of guilt or shame, it’s really a discussion about differing views of marriage.

You’re never in debt to your spouse. You should be all in where your husband or wife is concerned. Remember the vows? For richer, for poorer. In sickness and in health. If she makes you chicken soup when you’re sick, does she charge you for it? Of course not. When you get married, you agree to take on each other’s burdens. Once you walk down the aisle with someone, you’re choosing to serve each other. You’re also choosing to take on each other’s debt, each other’s income, each other’s assets and each other’s crazy parents. Everything!

It all boils down to having a shared view of a proper marriage relationship. And the proper (and biblical) view is we own everything. There’s no mine and yours anymore. Now, you can’t make her feel—or not feel—a certain way. But you can ask her questions to understand where she’s coming from and what blockers are keeping her from being totally together in this. Talk about it. Put your heads together and practice thinking about your marriage as a union.

It will take some encouragement from you and some getting used to on her part, but if you work together, it’s a muscle you can grow and develop together!

—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 of Ramsey Solutions.

Dear Dave,

Our son has been married for about three years, and he and his wife are havingf inancial problems. He wants to live on a budget and save money, while she hates the idea of budgeting, and always wants to buy expensive things. They make enough to get by, but they’re not rich. How should we handle it when he asks us for advice?

Stan

Dear Stan,

If he can’t get her to realize these habits are hurting them and their financial future, and if it’s an issue they’re going to continually butt heads over, it would be smart for them to sit down with a good marriage counselor or pastor. Something like this needs to come from a neutral and objective third-party.

Do you get what I’m saying here? The last thing he needs to do is go back to his wife spouting stuff like, “Well, my parents said…” Remember when you were first married, Stan? You didn’t want your in-laws always hovering around putting in their two-cents worth, either, right?

I know you folks are concerned. It’s only natural, because you love them and care about them. But if your daughter-in-law feels like her in-laws and her husband are ganging up on her, it could do way more harm than good!

—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’m a single mom, and I opened my own small business last year. The business isn’t growing at all, and my mom and dad are helping me with the bills. On top of all this, I don’t receive any child support payments from my ex-husband. But my biggest concern is our home. I bought it four years ago, and when I opened my business, I did it with a home equity loan. Do you have any advice?

Tammy

Dear Tammy,

You need to close up your business, at least temporarily, and go find some money-making work. I’m sorry to be so blunt, but you’ve got a really big mess on your hands.

Long story short, the money you make at another full-time job is likely to decide whether you can stay in your home. If you’ve got a mortgage, home equity loan and business debts hanging over your head, the chances of this are slim. You probably need to consider the idea moving into a small, affordable apartment for a while, too. If you do this, get your debts paid off and your finances back in order—which includes living on a budget and saving—you might be able to buy a house again in a few years.

I know the idea of giving up your home and business is hurtful, but sometimes when you have a serious illness, extensive surgery is needed to fix the problem. And right now, you’ve got a very serious financial illness.

I want you to understand how I’m looking at this, Tammy. The house alone is not the problem. You borrowed money to open a business, and that was your first mistake. You also have no savings, which is another mistake, and now your business isn’t making a profit. See how all of it combined adds up into one big mess?

I love your spirit, and the fact that you want to be an entrepreneur. But you’ve got to get control of your money first. If you don’t, this thing will eat you alive.

—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,

Are home warranties a waste of money if you already have a fully-funded emergency fund containing six months, or even more, of expenses set aside?

Jodie

Dear Jodie,

I don’t do extended warranties, because they’re not a good deal. In my mind, you’re better off to self-insure against damage or things breaking down. That way, you can put what would have been profit and marketing dollars for the extended warranty company in your own pocket. I mean, think about it. If you buy something, but can’t afford to fix it if something goes wrong, it’s not really a smart move to buy it in the first place, is it?

I always recommend an emergency fund of three to six months of expenses to cover the unexpected things that life will throw at you. In most cases, this amount of cash—sitting in a good money market account with check writing privileges—will allow you easy access in the event of unexpected expenses or a financial emergency.

—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 switched to a debit card so that the money I spend comes directly from my checking account. But I still have a problem some months with overspending and buying things I shouldn’t. Do you think I should stop using my debit card?

Debbie

Dear Debbie,

When I made the decision to get intentional with my money, I just used cash. It’s hard to spend it when you don’t have any on you. It’s a tough thing, I know, but you have to make a conscious decision to start living differently. You’ve got to get mad at the things that steal your money a dollar or two at a time enough to take action.

Try looking at your life as a whole, not a moment at time. All the moments you’re living right now will have either a positive or negative effect on your future. I decided I wanted the greater, long-term good, so I gave up on the short-term stuff.

Debit cards are great tools. You can’t spend money you don’t have with them like you can with a credit card. But you’ve still got to budget very carefully for each month, and give a name and a job to every single penny of your income. Otherwise, you can still overspend.

—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, 

My wife and I have always accepted the fact that we’d have a mountain of debt to pay off after the holidays. Having to deal with it all seemed more frustrating this year than ever before. Can you tell us how to make it through the next Thanksgiving and Christmas without having to pay off so much debt? 

Brady 

Dear Brady, 

Giving is a wonderful thing if your intentions, and your finances, are in the right place. But generosity isn’t meant to be stressful to you or your bank account. It’s all too easy to try to justify overspending during the holiday season, because so many things you do are for family and friends. Still, you shouldn’t let yourself become trapped by the shopping craze or overspending just because everyone else is doing it.  

Give with the right intentions, and give with a financial plan in place ahead of time that doesn’t include debt. Thanksgiving is always on the fourth Thursday of November, right? And Christmas always falls on December 25^th. The holidays don’t come as a surprise to anyone, so don’t wait until November, then act shocked that it’s all just around the corner. Jump on things right now, and start setting aside a little in your budget each month throughout the year for the holiday season. 

Sit down with your wife, and decide together how much you can put aside each month for Thanksgiving and Christmas. Once you agree on an amount, make a list, check it twice and stick to it. It’s easy to find something in the mall you just have to buy for someone. And that’s where problems start. So, include amounts you’re going to spend on each person, each charity, or each event. It’s all just common sense. But it’s up to you and your wife—together—to decide to live on a budget and give every single dollar a

job.  

You can do this, Brady. Make it happen! 

—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, 

My wife and I have started teaching our five-year-old son about money. Do you feel we should step in and fix things when he makes mistakes, or let him experience the consequences of his actions? It’s so hard on my wife, especially, to see him disappointed when he makes a mistake, and his plans don’t work out.  

Lane 

Dear Lane, 

I know this might sound mean to some folks, but sometimes a good financial disappointment when you’re young is the best thing that can happen to you. They’re hard to watch happen, or to experience, but often they’ll teach life-long lessons. No decent parent wants to see their child sad or hurt, but reality is a pretty good teacher when it comes to learning how the world really works. 

One of the jobs of a parent is to look for teachable moments with their kids. Of course, when it comes to teaching there’s always a chance the student won’t learn the lesson well enough the first time around. I’m not sure how you’re doing things, but if I were in your shoes, I’d follow these steps. First, give him a chance to earn some money. In my book, that means work. No allowances! There’s a lot of self-esteem and value to be found in accomplishing a given task successfully. Then, once you pay him for the work he does, you have another perfect chance for teachable moments, because you can help him learn about saving, spending and giving, and how to do all three wisely. 

It’s always hard on parents when they see their kids unhappy. I know we went through it with ours. As a parent and protector, you want to jump in and make everything okay. But the hard truth is that fixing or doing everything for them is the easy way out. And in the process of doing that, a child will begin to develop a sort of learned helplessness.  

Sometimes, Lane, you need to love kids enough to not do things for them. Let them make some mistakes, experience the consequences and fix things themselves. And it’s better for them to do all this while they’re still under your guidance and protection.  

—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,  

My husband and I bought a franchise recently, and we are opening our business in a couple of months. We’ve got $40,000 saved up, but my husband wants us to take a two-week vacation before we open for business. He feels that the business will completely consume us for the next two or three years, and he wants to go into things relaxed and refreshed. How do you feel about this idea?  

Jill  

Dear Jill,  

I understand where your husband’s coming from. A business is very time consuming, and to make it a success you’ll both have to eat, sleep and breathe it for a very long time.  

But here’s the reality of your situation. Right now, you’re basically unemployed. On top of that, you have just $40,000 with which to start a business. It’s time to rev up your engines and get to work, not spend a bunch of money vacationing. Trust me, there’ll be plenty of time to celebrate after you’ve won, maybe in even bigger and better ways, if you’ll just delay gratification and put in the dedication and hard work now.  

When it comes to opening a new business, a good rule of thumb is this: Everything’s going to take twice as long to accomplish as you thought it would, and everything’s going to be twice as expensive as you thought it’d be. I’m sure you’re both smart people, but my guess is you’re not exceptions to this rule when it comes to opening and running a small business.  

Think about it, every single dollar connected with your business could mean the difference between survival and going under. Like I said, I kind of get your husband’s thought process, but it would be a very unwise idea right now. You’ve got to look at the big picture. You’re going to be heartbroken, and maybe in a real financial bind, if you have to close up shop in a few months because you ran out of money.  

On the other hand, if you work hard now, stay smart and make this thing a success, you can take a vacation—and really celebrate—when the time is right!  

—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, 

My best friend is having financial problems, and I’m worried about him. He’s “between jobs” now and making less than $600 a month through a part-time job. He says he’s holding out for his dream job, which is about ten hours away, but even when he’s working full time, he always asks to borrow money or says he’s running low. He interviewed for his dream job several months ago, and I haven’t got the heart to tell him he was probably passed over for the position. Is there anything I can do to help him?  

Garrett 

Dear Garett, 

I assume that since you’re good friends, he’s willing to listen to what you have to say. There’s absolutely nothing wrong with having a dream job. You just have to be practical and realistic at the same time. 

This next part is more observation than insult, so I hope you’ll understand. Your friend sounds to me like he might be a little impulsive and unrealistic. When it comes right down to it, maybe a touch immature, too. So, I think what we’re talking about here is how to give your friend a gentle, well-intentioned nudge in a more realistic direction. He needs to open his eyes to some positive financial realities of life—like living on a written, monthly budget—and not making a habit of chasing rainbows and making excuses.   

If he came to me for advice, the first thing I’d tell him is that the most employable people are ones who aren’t broke. When you go into a job interview and you’re broke, it’s easy to come off as desperate and tense. That doesn’t make for a very good interview.  

The answer to that, when you’re essentially unemployed, is to work any legitimate full-time job. At the very least, two, three or even four part-time jobs. Deliver pizzas, wait tables and mow yards. It’s doesn’t matter what you’re doing, as long as you’re generating a livable income for yourself. Smile and be professional at whatever you’re doing, too. You never know when you might come face-to-face with your next real employer. But none of this will happen if you’re working three or four hours a day, and spending most of your time at home in front of the television. 

I hope this helps. I hope your friend will listen to you and understand you have his best interests at heart. But if he doesn’t, all you can do is hope for the best and pray for him. 

Best of luck, Garrett. You’re a good friend. 

—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, 

My mom and dad always told me to live within my means. As an adult, I’ve made some mistakes with money, including falling right back into debt after paying off everything. I’m tired of this rollercoaster, and I want to get control of my finances for good. Can you give me some advice on where to start?  

Melissa 

Dear Melissa, 

It’s frustrating, isn’t it? But making mistakes with money means just one thing. It means you’re human. We’ve all done it. Think about this, though. We’re approaching a traditional time of the year for changes. On top of that, you’re smart enough to have realized what you’ve done in the past hasn’t worked.   

Believe it or not, I was once in the exact same spot you are now. When it happened to me, there were three pieces to the puzzle that helped me break the cycle. One was fear. Specifically, I was scared to death that I wouldn’t be able to take care of my family, and that I’d retire broke. Now, don’t misunderstand me. No one should live their lives in fear. But a healthy, reasonable level of fear can provide needed motivation.  

Another was disgust. I realized what I was doing was stupid. I was tired of living that way, and I made a conscious, purposeful decision that things were going to be different.  

The third piece, and maybe the most important because it’s connected to our spiritual walk, was contentment. We live in a society that’s constantly having the idea that we’ll be happier, or more successful, or more admired, if we’ll only buy this or that product. We’re constantly marketed to, and when we have this stuff in our faces day after day, we can become unsatisfied with just about every aspect of our lives. Don’t let it drag you down. It’s all just an illusion. 

One of the things I did to combat this, was to start living on a strict, written, monthly budget. Also, I stopped going places where I was tempted to spend money. You shouldn’t give a drunk a drink, right? So, don’t put yourself in a bad situation when it comes to your behavior with money. If you go wandering through the mall without a specific plan, you’ll lose every single time. 

When you go to the store make a list of only the things you need. On top of that, take only enough cash with you to buy what you need. If you can walk in and back out without buying a bunch of stuff that wasn’t on your list, it’s a win. Every time you do this, it’s another win and another step away from your old habits and in the right direction. 

You can do this, Melissa. God bless you. 

—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. 

Most families have money problems at some point. And when I was a little kid, our family went through tough financial times just like everyone else. A job layoff can take your breath away. An illness can leave you completely broke. Little kids in the house may not know exactly what’s going on, but there’s stress in the air. They’re told, “Times are tough, so we can’t go on vacation this year,” or “We have to move,” or “Christmas is going to be slim.” 

My parents were in the real estate business and were building homes. Then, the economy went sideways and left them in a mess. Outside forces brought trouble to our house. We never went without food, shelter, or anything else, but the air changed in our home. I always thought money would solve the problem, so I vowed that one day I would become a millionaire. I doubt I even knew what that meant, but in my head, I thought it meant money would never be a problem. 

Believe it or not, I’m a spender by nature. I’ve always enjoyed spending money. Of course, when I was young and immature, that idea of spending for fun led me into the trap of thinking if I got enough Stuff, I would be happy. I would’ve never admitted it out loud, but there was also the stupid idea deep down that if I got enough Stuff, I would be happy and safe, or if I got the right Stuff, people would be impressed.  

With that driving force, I went about the business of earning piles of money so I could spend piles of money. But a funny thing happened. The Stuff became . . . unsatisfying. There was never completion or peace after a purchase, only the need to buy more.   

Stuff just doesn’t do it. 

By the time I was 26, I was a millionaire making $250,000 a year. Not long after that, due to some really dumb business decisions, I went broke and lost everything. That was 30 years ago.  

I also met God during this time, who did bring me peace and completion. I finally realized I was pouring Stuff down a spiritual hole, and Stuff is not designed to fill that hole. No matter how many cars I bought, or fancy dinners I ate, or cool places I traveled to, there was always something still missing.  

During the following decades, we slowly began re-building wealth . . . this time while always giving. In the process, we discovered there’s much more joy in giving than in Stuff. If you haven’t experienced the joy of giving, there’s no better time to start than during the holiday season. Who knows? It might just be the encouragement you need to become a giver all year long.  

Merry Christmas, everyone! 

* 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, 

We’re following your Baby Steps plan, and we’ve paid off all our credit cards. But when I talked to my husband the other day about cutting up the cards and closing the accounts, he said he would rather keep the accounts open, and the cards locked away in a drawer for use as an emergency fund. He says this will help us have an emergency fund in place quicker than saving for one. I think there’s more behind his reasoning, though. He grew up in a very poor family, and I wonder if he’s not afraid of somehow ending up in that kind of situation again. What can I do to convince him to follow your advice? 

Ramona 

Dear Ramona, 

I think you’re a very perceptive lady. You said your husband grew up in poverty, right? So, what I’m hearing is the cards represent almost a security blanket for him—a financial security blanket. I get that, but here’s the thing. If you had a fully funded emergency fund of three to six months of expenses sitting in the bank, I’m talking about hard cold cash, you’d have the security of knowing that the expense of a new air conditioning unit or transmission for the car would only be a minor inconvenience. And, you’d be able to cover it easily without going back into debt. 

Instead of actively trying to convince him of something, a better route might be to sit down together and talk through the whole thing. Explain to him you think you know why he feels the way he does, and that it’s understandable. Then, ask him if there’s a reasonable amount you two could have in the bank that would help him stop worrying. Discuss it, agree on an amount and then agree to cut the cards up and close the accounts when you reach that figure. Remind him, too, you’d still have your debit cards in hand in the event of an emergency.  

Above all, Ramona, make sure you work together. Be patient and understanding. If he has recognized the wisdom of getting rid of debt and taking control of your finances, he’s moving in the right direction! 

— 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, 

My wife and I are debt-free except for our mortgage and two Parent PLUS loans for our daughters’ college educations. One of the loans totals $18,078, and the other is for $41,500. Both girls want to pay them off using the new extended plan being offered, but I’m 59 1/2, and I’ve got about $500,000 in a 401(k) from a previous job along with $125,000 from a job I started five years ago. We’ve been thinking about just paying the loans off for the girls, but we wanted to know your thoughts.  

Mike 

Dear Mike, 

If I were in your shoes, I’d just go ahead and pay them off. Technically, you’re liable for the loans. They are not.  

The extended plan you’re talking about is garbage. In reality, it means the loans are never paid back. The extended plan is 30 years of not even making the principal payment. No interest is paid, and they don’t touch the principal. The whole thing works backward for 30 years, and it’s the very definition of a stupid government program.  

I really don’t think you want your daughters to be part of something like this. But that means you’re going to be stuck with paying off these loans. You might as well just own it and pay them off now.  

I want you to understand this, Mike. I don’t advise people to dip into their savings every time a problem comes up prior to retirement. But you’re 59 1/2, and at that point there’s no penalty. Plus, you’ve got $625,000 sitting there. You’re going to pull less than $60,000 out, plus a little in taxes, to make the problem go away. It’s not as bad as it could be, but I’m afraid you’re going to have to pay a little stupid tax on this one. I’m sure your girls didn’t know all this, but it’s a perfect example of what can happen when you put your faith in a stupid plan coming out of Washington, D.C.  

I hate it for you guys—and everyone else in America who took out a bunch of student loans—because you’re getting messed over by your own government. The first way they messed you over was to put a student loan program out there and then tell you the way to success was to borrow tens and hundreds of thousands of dollars for a degree in left-handed puppetry. And now, guess what? You’re a barista! Then, they start shouting they’re going to forgive it all. After that it’s, “No, we’re not. Yes, we are. No, we’re not. Yes, we are.”  

The fact is, they don’t intend to forgive it. It’s the biggest scam in history—mathematically speaking—perpetrated on the American public by our government.  

— 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 of Ramsey Solutions. 

Dear Dave, 

My husband and I have just $12,000 to pay off before we’re debt-free. We’ve paid off almost $70,000 in debt in the last two years, and we both just turned 50. We would like to buy a house soon, but we know we need an emergency fund. It would take us over a year to build up an emergency fund, so since we’re getting older, should we make adjustments to the Baby Steps? 

Debbie 

Dear Debbie, 

You’ve been making great progress, and you obviously have a good income to be able to pay off debt that quickly. But it shouldn’t take you two a year to build up an emergency fund, considering the rate at which you’ve been paying off debt.  

Yes, you need a fully funded emergency fund of three to six months of expenses set aside before you start saving a down payment for a home. Maybe in your case, you could lean a little more toward the three-month side with your emergency fund. Then, after you’re all moved in, you could revisit the emergency fund and beef it up to six months. 

Fifty isn’t old, Debbie. Just stay on course and stick with the plan. You two have plenty of time to get your finances in order and find a great home! 

—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, 

Our daughter’s college education is pretty much paid for already through grants and scholarships, and my wife and I make good money. We just started your plan, so when we get to Baby Step 5, saving for college, can we substitute that with saving for a wedding? 

Benton 

Dear Benton, 

I’m glad you’re thinking ahead, buddy. And I don’t have a problem with your idea. It’s always a good plan to save for a wedding, if you have the financial resources to do so. 

Did you know the average wedding in America this year, according to Zola.com, ran around $29,000? Of course, you don’t have to pay anything close to that amount to make a wedding a beautiful and memorable occasion. Your household income, debt, savings and other factors will all play a part in how much you can legitimately afford

Sit down with your wife, crunch some numbers and see what makes sense in your situation. Just remember to pay cash for the wedding. If you have to go into debt to make it happen, you’re spending way too much!  

—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,  

My husband and I want to do a live-in and flip real estate purchase. The idea is to buy a fixer-upper and rent out the basement to help with the mortgage payments. How do you feel about ideas like this?  

Erin  

Dear Erin,  

In a situation like this you need to do a basic business analysis. You’ve got to have a plan in place, and you’ve got to figure out the worst-case scenario. Part of this is determining whether you can survive if things fall apart. In this case, the worst case is that you can’t get a renter, and the house doesn’t sell. It puts your family in jeopardy, so to me it’s not an option.

Want my honest opinion? I think you’ve both got a case of house fever right now. The possibility I just mentioned isn’t a rare occurrence. Lots of people have had the same idea, with the best of intentions, and still wound up in a big mess. I love real estate. I mean I really love real estate. And I’ve flipped more than a few houses in my day. But the particulars of this deal make me a little nervous. If you and your husband are willing to accept the possibility of things not working out like you planned—and the fact you might have to take additional jobs for an unknown length of time just to make ends meet—then it might be a play. But for me? Nope. I don’t like putting myself into these kinds of situations.  

When I was much younger, I was willing to do all kinds of dangerous stuff and ignore the risk. But going broke decades ago knocked that kind of thinking out of me in a hurry. Any deal that runs the risk of leaving you bankrupt, or the victim of a foreclosure, just isn’t worth it, Erin.  

—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,

My fiancée and I plan to get married in May, and we are preparing to buy a house. We both work in sales, and combined we bring home about $7,400 a month before commissions. Our average commissions usually boost that to $12,000 a month. I’m worried that the house we’re looking at doesn’t fit our budget, though. The home costs $350,000, and we’re looking at monthly payments of $2,840 with taxes and insurance figured in. Do you think this scenario will work for us?  

J.T.  

Dear J.T.,  

Are you doing this on a 15-year fixed-rate mortgage? If you’re not, you need to change that right away. That’s the only kind of mortgage loan I recommend. With the numbers you’ve given me, you two can afford that on the shorter terms I mentioned.  

Now, let’s move on to the next thing. You’re speaking about buying a home as if you’re already married, and you’re not. I will not advise you to buy a house with someone to whom you’re not married. You’re talking to a guy who’s been doing this for 35 years, and I’ve heard all the horror stories that go along with, “We bought the house together, but we didn’t make it to the altar together.” Talk about an ugly breakup!  

You two have a bad case of house fever right now. Believe it or not, you aren’t required by law to run out and buy a home just because you’re planning to get married. Please, wait until after the wedding to buy a home. And even then, wait another year or so. Buying a home is the biggest—and most expensive—life decision most people ever make. Take some time to just enjoy being married and getting to know each other even better for a while.  

Listen, if you’ve already jumped the gun, if you already have this house under contract or anything like that, I would not close the deal. I’d talk to the sellers and tell them they can keep my earnest money, but I’m walking away. And get ready, because if you do this, your fiancée is liable to look at you like you’ve got snakes coming out of your ears. Make sure to communicate with her about where you’re coming from and why you’re doing it. It’s the best, and smartest, thing you can do in the long run, J.T.  

I’m not predicting you two are going to break up or anything. I hope with all my heart nothing like that happens. But I’m begging you, buddy. Don’t buy a home with someone you’re not legally married to. The potential downside is just too great.  

— 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 read where you recommend saving 15% of your income for retirement. Should I count my employer’s contribution to my retirement plan as part of that 15%?  

Carlotta  

Dear Carlotta,  

That’s a great question. Employer contributions do not count toward the 15 percent I recommend setting aside for retirement. It’s great if you work for a company that offers perks like that, but I want you putting 15 percent of your money into retirement. Whatever your company matches, whatever its pension may be, or even having a military retirement package, none of that enters the equation. I want your money in your name.  

Baby Step 4 of my plan says to put 15 percent of your income into retirement accounts. The first thing you should put money into is a matching retirement account. If you’ve got a 401(k), a Roth 401(k) or a 403(b) and your employer offers a match, you should do that up to the match before anything else.  

Let’s say your employer will match three percent. Since the goal is 15 percent, that still leaves you with some work to do. You’ve got three percent of your own money already going into retirement, so then you could look at a Roth IRA. If the Roth, plus what you invested previously to get the match doesn’t equal 15 percent, then you could look at a 403(b), or go back to your 401(k) to hit the 15 percent mark.  

And remember, if you’re going to reach your retirement goals, you can’t do it alone. King Solomon, one of the wisest men who ever lived, wrote: “Where there is no counsel, the people fall; But in the multitude of counselors there is safety” (Proverbs 11:14 NKJV). That’s why you need a quality financial advisor—one with the heart of a teacher—to help you navigate complicated financial issues, and guide you toward the kind of retirement you want.  

Do you see what I’m saying here, Carlotta? I want you—not the company you work for—to control your financial destiny. I want you to be able to retire with dignity, and enjoy life after working hard and saving. The responsibility for making that happens falls to you!  

—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,  

My wife and I are both 36 years old, and we have two children. Our son is six, and our daughter will be four next month. We’ve been walking through the Baby Steps, and we should have our home paid off sometime next summer. We realized the other day the one thing missing from our financial picture is life insurance. We both work outside the home. She makes $60,000 a year, while I make $80,000 a year. At our age, and in our current situation, do you think we should we get 20-year or 30-year level term life insurance policies?  

Clay  

Dear Clay,  

You guys are doing a great job of getting control of your finances and planning for the future. Speaking of the future, do you plan on having more kids? If you do, you might want to go with 30-year policies. If you’ve decided two are enough, then based on your present situation I think 20-year policies would work out fine.  

I recommend folks have 10 to 12 times their annual income in life insurance coverage. That means you’d need between $800,000 and $960,000 in coverage, while your wife needs a policy in the $600,000 to $720,000 range. But let’s take a deeper dive into all this.  

Your kids will be in their mid-twenties in 20 years. Ideally, they both should have finished college by that time, or at the very least, be working and living on their own. If you continue to follow my plan, you and your wife will have paid off your home in a few months and be completely debt-free. And, you’ll have been saving 15% of your income for retirement over those 20 years. On average, that alone should give you more than a half-million dollars for retirement.  

Do you see where I’m going with this, Clay? Eventually, you two will become self-insured by getting out of debt, staying out of debt and piling up cash. So, if you’ve got $500,000 or more in a retirement fund, no debt and your children are grown and out of the house, even if you or your wife were to die unexpectedly at that point, the other would still be taken care of and in great shape financially.  

Keep up the good work!  

 —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’m 67, and I’ve been wondering what your position is on preplanning for a funeral versus prepaying. Is one a better idea than the other, or should you do both?  

Shannon  

Dear Shannon,  

This is a great question. I wish more folks would think about these kinds of things ahead of time.  

Preplanning a funeral is truly a gift to your family. But if you prepay, it’s a gift to the funeral home. Doing the legwork and setting things up ahead of time so your family doesn’t have to make a lot of financial decisions in the middle of an emotional situation shows them respect and consideration.  

When you buy a prepaid plan, you could be years or decades away from needing it. Plus the inflation rate on funerals is about 4%, so in essence, you’d be making 4% on your money. And, of course, you’re locked into everything at that point. If you took the cost of a funeral and invested it at age 30, instead of 4% on your money, you’d get an actual investment return. By the time you’re 80, you’d have about $600,000. So prepaying in your 30s or 40s is mathematically ridiculous. Now, if you’re in your 60s, like you and me, there aren’t as many years for that money to grow. You wouldn’t see a huge return on investment, but it would still provide for a nice service.  

Believe it or not, it took me a while to figure out that the funeral world is an industry—an extremely profitable industry. And like with many things, when you add on stuff like financing or prepayment to a purchase, you’re adding to their profits. Most funeral providers make as much money on prepayment plans as they do in actual margin on the goods and services that go along with this kind of thing.  

That being said, I’ve got no problem with a business or industry making money. If they treat their customers well, no one’s taken advantage of, and a quality product or service is provided, it’s all good. But when it comes to funerals, I tell people to preplan. Don’t prepay.  

— 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’m currently on Baby Step 2, and I have about $7,000 in debt to pay off before I can move to bulking up my emergency fund in Baby Step 3. When you’re paying off debt, what do you recommend for 401(k) contributions?

Rae

Dear Rae,

I recommend putting a temporary stop to investing while you’re getting out of debt. Lots of people are shocked by this advice, and some disagree with it, because they’re afraid of missing out on their employer’s match or the wonders of compound interest. But before we go any further, let me emphasize one thing. The key word here is temporary.

Baby Step 1 is to save $1,000 as a starter emergency fund. Baby Step 2 is paying off all of your debt, except for your home, from smallest to largest using the debt snowball plan. During this time you’re attacking your debt with incredible intensity, and putting every penny you can scrape together toward paying it off.

Working my plan, the average person can pay off all their debt, except for their home, in 18 to 24 months. Some folks can do it faster, and for some it takes a little longer. But during this time I want your financial focus to be on nothing but getting out of debt. Once that’s done, you’ll find you have a lot more control over your biggest wealth-building tool—your income.

Trying to accomplish too many things at once diminishes the ability to focus. And when you spend all your time nickel-and-diming everything, the result is that nothing at all gets done very well. You need to really move the needle and see results, because personal finance is 80 percent behavior and only 20 percent head knowledge. It’s not so much a math issue, because if you’d been doing the math all along you wouldn’t have a bunch of debt.

That’s why, for a short period of time, I want you to concentrate with laser intensity on knocking out debt. Once that’s out of the way, you can pour even more money into investing, saving and giving!

— 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,

About a year ago, my husband and I offered an empty house we own to a young man at our church, who had lost his home and everything he owned in a fire. He has taken good care of the place, but has made no effort to pay rent. We don’t need the money, because we’re in good shape financially, and we were thinking about selling the other house, anyway. I’d like to simply write it off, and gift the home and title to this young man, but my husband feels he owes us something for putting a roof over his head all this time. What are your thoughts?

Penny

Dear Penny,

I think you and your husband have good hearts. I also think you handled this situation poorly.

From the sound of things, you put him there originally on a charity basis, and now your husband wants to change the deal. You didn’t set up any kind of rental agreement, but your husband feels you two are owed something? I’m sorry, but no. That’s on you.

At this point, you have some big decisions to make. Were you providing free housing to someone who was struggling, or were you providing a free house to someone who was struggling? I understand this young man experienced a terrible tragedy. But at the same time, I’m not hearing lots of evidence that he’s putting his life back together. If after this long the guy’s not back on his feet and out on his own, you may be enabling bad behavior on his part.

Now, if you want to gift him the house, that’s your decision. If you want to approach him with a rental agreement or sale proposal to which all parties are amicable, that’s okay, too. If neither of these ideas are in the cards, I’d make sure to sit down with this young man and have a gentle—but firm—talk. I’d let him know I had been happy to help him over the last several months, but that he needs to start moving forward with his life. I’d set a very reasonable and patient timeline for a move-out date, and let him know once that time is up, I’ll be selling the house.

That’s fair to everyone concerned.

— 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.