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Dave Says Archives for 2022-08

Which Is Best?

 

 

Dear Dave,

 

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

 

Monica

 

 

Dear Monica,

 

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

 

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

 

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


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

 

— Dave

 

 

* Dave Ramsey is an eight-time national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

Pay Off The Mortgages? Not So Fast...

 

 

Dear Dave,

 

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

 

Jane

 

 

Dear Jane,

 

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

 

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

 

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

 

God bless you two!

 

— Dave

 

 

* Dave Ramsey is an eight-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

A Different Kind Of Creditor?

 

 

Dear Dave,

 

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

 

Brandon

 

 

Dear Brandon,

 

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

 

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

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

 

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

 

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

 

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

 

— Dave

 

 

Dave Ramsey is an eight-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

Help Them...And Help Them Get Help

 

 

Dear Dave,

 

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

 

Samantha

 

 

Dear Samantha,

 

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

 

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

 

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

 

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

 

— Dave

* Dave Ramsey is an eight-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

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