14 minute read
Dave Says
Dave Ramsey
Remember, Everyone Makes Mistakes
Dear Dave,
I am on Baby Step 2 of your plan, and I am about four months away from being debtto be very careful to make sure the timing on this deal makes sense.
Personally, I wouldn’t buy another house until the first one sells. — Dave
free. My younger brother is a good person, but he is very careless with his finances. He is always asking to borrow money from me. I don’t want to be mean or damage our relationship, but what is the best way to respond to a sibling who continually asks for money? — James
Dear James,
Honesty is always a good thing. If I were in your shoes, I’d just tell him the truth. Sit down with him, and have a friendly—but real—conversation where you let him know you’re working hard to get out of debt and don’t have any cash to spare. Explain that you’ve decided being in debt is dumb, you want a better life and that you don’t plan to borrow or loan money anymore.
You’ve got to look at the big picture in situations like this. You’re not helping someone if you participate in their misbehavior with them. Sometimes, especially when it comes to family, you have to love someone enough to tell them the truth. And in some cases, that can mean saying no and telling them to grow up and get their act together.
You’re not responsible for your brother’s reaction to all this, James, but you can control your words and use them in a caring manner. Do this with a kind spirit, and remember we all make mistakes. He may take it well, or not so well. But you’re not really helping someone who’s immature or irresponsible with money when you give them cash. At that point, you’re an enabler. It’s like giving a drunk a drink.
God bless you, James! — Dave
Don’t Buy Until the First One Sells
Dear Dave,
My wife and I are looking to move from Washington, D.C., to Greenville, South Carolina, in a couple of months, and then sell our current home in February or March after she gets things wrapped up with her job. We are a little worried, though, because of all the things we’re hearing about the housing market crashing. Could you speak to this, please? — Nick
Dear Nick,
Your emotions and things you hear can creep up on you. I get that. But the fact is, there are still four buyers out there for every house that’s up for sale. Now, are the buyers and the market as active and frenzied as they were several months ago? No. But you have to remember, the last couple of years have been crazy-strange times for the housing market.
I’ve been in the real estate business since 1978, and I’ve never seen anything like it. Usually, it takes about 90 days to sell a house. You’ll get some offers, and none of them will be at full price, but everyone will have time to think about things. That’s normal, and it’s probably a lot closer to how things will work themselves out for you now in Greenville.
But in any economy, my advice to you would be don’t buy another house until yours has sold. If you end up with two house payments and your old house is sitting empty while you’re having to pay for the mortgage, taxes, utilities and all the upkeep to make sure it’s ready to show, you’re going to become what’s known as a motivated seller. I don’t want you to just give it away, but you’ll need
Being Hounded Isn’t the Issue
Dear Dave,
I lost my job a couple of years ago. As a result, I ended up in about $25,000 of debt through credit cards and a consolidation loan. Now I have a great job making more than I’ve ever made before, plus a car loan for about $13,000. The older debts went to collections, but I’m not being hounded by collectors at this point. I want to get control of my money and do things the right way, so how should I handle things? — Mike
Dear Mike,
Well, being hounded isn’t the issue. Morally, you owe the money. You took money under agreements that you’d pay it back, and that means you need to pay it—both the old and new debts.
I’d start by running two debt snowballs. Let’s do one for the car and any other active debts you have first since the collectors aren’t after you about the old, dead debt. Then, smallest to largest, start knocking out the debt that’s in collections. When it comes to these guys, reach out and get an agreement in writing detailing exactly how much you owe and the monthly payment amounts. Remember,
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do not give any of these folks direct access to your bank accounts.
There’s no upside to not paying what you owe. It’s an integrity issue, it’s a legal issue, and it’s a credit issue. Did I mention it’s an integrity issue, Mike?
You want this stuff out of your life. If you don’t take care of it, I guarantee it’ll come back to haunt you somewhere down the road! — Dave
A Church Car? You’ve Got to Be Kidding!
Dear Dave,
My mom took out a Parent PLUS loan in 2009 to help pay for my college education. I also took out $70,000 in student loans myself. My mom never made a payment on the loan she took out for me, and now the amount due on the Parent PLUS loan has ballooned to $100,000. She recently told me in her mind it was my loan in her name, and I should be the one to make the payments after I became financially stable. Thankfully I just got a new job making $140,000 a year. With this I can finally make a dent in my own loans, but she asks me every week if I’m going to pay the Parent PLUS loan. My mom is a nurse practitioner, so she makes good money, but she recently financed two new luxury cars within 24 hours of each other—one for work and one for church. She also has loans out from borrowing on her 401(k) and credit card debt. Should I take over the Parent PLUS loan under my name? — Tommy
Dear Tommy,
Wait, are you serious? Your mom has a church car? I’ve never heard of such a thing. But hey, I’m going to talk to my wife about this. I knew I needed another car, I just didn’t know I needed a church car. Oh, my goodness!
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Ok, here’s the deal. If you had an agreement with your mom, or promised at any time to pay back the Parent PLUS Loan when you were able, you should cover it. But that’s not what you told me. It sounds like your mom has a good heart and was just trying to help, but she did it in a dumb way. From what you told me, she’s done a lot of dumb things with money.
Under no circumstances do you take the loan back under your name. In fact, I’m not certain you can even do that with a Parent PLUS Loan. You need to get your debt cleaned up first before trying to help her. If you choose to be a bigger help after that, you need to start things by having a serious conversation with your mom. She needs to hear that she’s being absolutely silly with her money. Let her know you’re willing to help because the loan was for your benefit. But make sure she understands you won’t pay it all, and you won’t do it while she’s making two luxury car payments—including one on a church car. That’s ridiculous.
Offer to be her biggest cheerleader, and help her find a good financial coach—someone with the heart of a teacher. You might want to let her know you’ll match whatever she pays toward the loan, so it’ll feel like a team effort. But also make sure she understands if she pays nothing in any given month, you’ll match that, too.
Good luck, Tommy! — Dave Walkways • Patios • Retaining Walls Spring/Fall Clean-ups • Weekly Lawn Maintenance Hydroseeding • Bobcat / Excavation Services Tree Service • Brush Mowing Services Tree Service • Brush Removal Services
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Dear Dave, www.SuperiorLCinc.com I use a debit card for all my regular, day-to-day purchases. However, I use a credit card for plane tickets, big ticket items, or when I shop online because someone told me it’s easier to dispute 508-252-4554 purchases when they’re made with a credit card. Are you putting your checking account at risk by using a debit card for these types of purchases? — Wendy
Dear Wendy,
I don’t know who this “someone” is, but they’re a lousy financial advisor. The firm of Someone, They Said, and I Heard? That’s a financial planning company you don’t want to work with.
A debit card has the exact same protections for fraud that a credit card has. It does come out of your checking account, but the bank has to put it back once you dispute the charge and prove your dispute. It may take a day or two, but they’ll get it done.
I’ve used a debit card for decades, and I haven’t owned a credit card since way back in my dumb-with-money days. I’ve never had any problems using a debit card, and I’m not going to make the mistake of playing around with debt ever again.
I hope you won’t either! — Dave
* Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business and many more. Since 1992, Dave has helped people regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.
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Rachel Cruze
Christmas and money—now there’s a combination that can send anyone spiraling. When you’re trying to take control of your money, saving for an emergency fund is a crucial part of the process. In fact, it’s so important that at Ramsey Solutions, the emergency fund makes up not one, but two of the seven Baby Steps. After you’ve saved $1,000 in a starter emergency fund (Baby Step 1), and you’ve paid off all debt except the house (Baby Step 2), we recommend saving three to six months of expenses in a fully funded emergency fund (Baby Step 3). Then, once you have a fully funded emergency fund, it’s time to keep it safely tucked away . . . you guessed it: in case of an emergency.
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But what do you do after you’ve reached this money milestone? Next, it’s important to make sure your emergency fund doesn’t become a crutch for non-emergencies. (Spoiler alert: Christmas is not an emergency.)
I know, I know. The hustle of the holiday season can sometimes feel like an “unexpected” money problem. From kids’ Christmas parties at school to last-minute white elephant gifts, even if you technically know that Christmas happens every year, unpredictable expenses can cause more panic than a little snow in the south.
But don’t worry, I’ve put together a list of tips to help you (and me) keep that emergency fund safe this holiday season. 1. Start saving now. Some of you have been saving for months, or maybe even all year. But if you haven’t, don’t freak out. You’ve still got a little time. Take a deep breath, and look at your monthly budget. Make small adjustments wherever you can to create a plan for your Christmas expenses. 2. Build a budget for seasonal spending. Write down every person (and party) you’ll need to spend money on, then assign a dollar amount for each item on your list. Don’t forget to create wiggle room in other ways too. For example, if you need more money to spend on holiday travel, consider making an agreement with your spouse that you won’t buy each other gifts this year. 3. Plan B is always an option. In this case, B stands for baking! If the holiday budget is getting tight, try gifting a homemade loaf of bread and a handwritten note to a few people on your list. If cookies mean a lot to Santa, a tasty treat made with love will feel like a warm hug to your family and friends. 4. Trim the excess. Traditions are great, but you don’t have to do something just because you’ve always done it that way. If you typically spend money on a fancy Christmas card, maybe this is the year you decide to share a fun Instagram post instead. Or if you host an annual holiday dinner, ask everyone to pitch in potluck style this time. The people who love you will also love to help you. 5. Think experiences over expenses. Like every classic Christmas movie teaches, the holiday season is really about community and connection. Try a new activity or experience that doesn’t cost money, like volunteering at a food bank as a family or hosting a game night for your neighborhood. There are tons of ways to spread holiday cheer without using your emergency fund. Now I don’t know about you, but that’s a list I’m excited to check twice! You’ve been good all year saving money in your emergency fund, and I don’t want you to undo your hard work with lastminute holiday expenses. Accidents and unexpected emergencies don’t stop for our favorite seasons. So, keep your emergency fund wrapped in a big red bow—for when you really need it!
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* Rachel Cruze is a two-time #1 national best-selling author, financial expert and host of The Rachel Cruze Show. She has appeared on Good Morning America, TODAY Show and Live! With Kelly & Ryan, among others. Since 2010, Rachel has served at Ramsey Solutions, where she teaches people to avoid debt, save money, budget and how to win with money at any stage in life. Follow Rachel on Twitter, Instagram, Facebook and YouTube or online at rachelcruze.com.
