Software developer wants to start a app business joint venture

Dear Dave: I work as a software developer, and recently a co-worker approached me about starting a side business together. We would create apps for the legal community with advice from my wife, who is a lawyer. The only problem is that we're in the middle of Baby Step 2 of your plan, and we still have some debt to pay off. Do you think starting a business would be too risky at this point? — Jeremy


Dear Jeremy: It sounds to me like this is the kind of idea that would require more in the way of brain sweat and time than money. I would just think of it as a part-time side job and go for it. However, make sure you have a clear understanding of exactly how much — if any — financial support would be required. Set these financial boundaries, and also be clear on when you expect the business to make money.

One thing I would warn against is ending up in a partnership if this thing becomes a success. Partnerships are bad news in the business world, so I'd advise you to figure out a way to structure things where you each own different parts — something more along the lines of a joint venture.

But in terms of doing some side deals, creating some cool new apps, and making money in the process? Absolutely, I would do that. Just figure out an intelligent way to structure the business and finances so you don't get pinched..

How to shop for Christmas without going broke

Dear Dave,
We’ve always just assumed that we would use credit cards for Christmas, and accepted the fact that there would be a mountain of debt to pay off in January and February. Can you tell us how to make it through the Christmas season next year without accumulating debt?
— Carol


Dear Carol,

Giving is a wonderful thing if your intentions — and your finances — are in the right place. But don’t let yourself get trapped in the shopping bonanza just because everyone else is doing it. It’s all too easy to try to justify overspending in the weeks ahead just because it’s a gift.

It’s pretty simple: Look at your budget, and see what you can afford to pay cash for during the holiday season. Once you and your spouse agree on this amount, make a list, check it twice and stick to it! Include the names and amounts you are going to spend on each person or charity. It’s just common sense, but it’s easy to find something in the mall you “just have to buy.” That’s where problems start.

Giving is not meant to be stressful on your finances. Give with the right intentions, and give with a financial plan in mind that does not include debt.

Another thing to remember is Christmas always falls on Dec. 25. Don’t wait until Thanksgiving to realize it’s right around the corner.

You could even get a real jump on things and set a little bit aside each month toward Christmas starting right now!

Requesting proof of debt payment

Q. After struggling with it for several years, I finally made the last payment on my Sallie Mae student loans this week. Do you think I should ask for a formal letter stating that it’s officially paid off? — Angela


A. Congratulations on finally kicking that old woman out of your house! It feels great, doesn’t it?

Sure, it couldn’t hurt anything to write and request formal confirmation that the book on your loans is closed and everything is paid in full. You can do this through email so you’ll have a record of contact, or you can send a certified letter, return receipt requested, through the post office. That way you’ll have a record they signed for it.

Following up on paid-off debts is always a good idea, Angela. You don’t want the hassle of possibly having to deal with greedy or incompetent collectors sniffing around three or four years down the road and no way to prove you’re free and clear! — Dave

To lend or not lend money to a friend

Q.: The guy who has been my best friend since grade school recently asked me to loan him $5,000. All I have in savings is $5,000, but I would be willing to give him $1,000. The problem is that while he’s a great friend with a good heart, he’s always getting himself into binds when it comes to money. Do you think I should give him $1,000? — Israel


A.: If I were in your shoes, and I was going to give this guy a fifth of everything I had, I’d want to know it was going to save his life. From what you’ve said, it sounds like he’s just out of control with his money while you’re trying to save.

That being the case, I’m not sure you’d really be helping him. If you want to gift your friend some money, then do it. But there’s no way I’d tell you to give him everything you’ve managed to save. And I certainly wouldn’t do it as a loan.

Ask yourself whether you believe deep down in your heart that giving this guy $1,000 would truly be a blessing to him or whether, by doing it, you’d be acting as an enabler and basically just funding more of his stupidity with money.

From what you’ve told me, I think there’s a good chance the answer is the latter. And if that’s the case, you can be a much better friend by saying you love him enough to not ruin your friendship. — Dave

Here's how to handle Restricted Stocks

Dear Dave,
My husband works for a large company and receives restricted stock bonuses of approximately $5,000 each year. We’re not sure exactly how long they’re restricted, and we both wonder if we’re allowed to sell these options?
Patty


Dear Patty,

You said your husband works for a large company, so my guess is they do this as an employee retention move. That’s why they restrict the stock. They’re trying to get people to stay with the company, and you’ll only be able to sell them after they are no longer restricted.

Usually, these kinds of things have a one- or two-year restriction. I doubt they’d put a five-year hold on it, but check with the company to find out the specifics. They can tell him when the stock is free to be sold.

If it were me, I wouldn’t hold on to too much of it. I don’t own single stocks. They have too much risk for my taste. Keep a little bit, if you want, but don’t put all or even most of your financial eggs into that one basket!

- Dave

Yes you can have a wedding without spending a lot of money

Dear Dave,
How do you have a wedding without debt?
Lynn


Dear Lynn,

Wow, where do I start on this one? I guess the best way is to tell the truth. Honey, that question kind of makes you sound like a little princess.

How do you have a wedding without debt? It’s really simple. You have a wedding with the money you have. There’s nothing wrong with small, inexpensive weddings. And once you accept that and start thinking about things from a mature, adult point of view, you’ll start realizing you can scrimp and save and have a really nice, small wedding.

Lots of people have beautiful, memorable ceremonies and even small receptions for less than $1,000. Sure, you can run out, go into debt and wear an $8,000 wedding dress for a few hours on one day of your life. Or, you can find one that’s much cheaper — even something that’s been worn one time — for a couple hundred dollars. Think that’s tacky? Well, let me tell you what’s even more tacky and dumb — going $15,000 to $20,000 in debt for one day!

To have a wedding without debt you have to be creative and think within your budget. That means growing up and not throwing a temper tantrum just because you can’t have every little thing you want. Most people don’t have lavish, expensive weddings, and guess what? Years down the road they’re still married, madly in love and laughing and hugging when they remember the best day of their lives.

Please, don’t turn what’s supposed to be a happy occasion into a financial mess that will take years to clean up!

—Dave

Resumes are not the only way to find the best candidate for a job

Dear Dave: I work as the executive director of a nonprofit charitable organization. Lately, I’ve been wondering if I should hire an employee as a development person. I don’t want to damage the work we do, and I can’t help but look at bringing in someone new as a gamble. Do you have any suggestions? How do you handle situations like this? — Denise


Dear Denise: Over the years, I’ve found that you can reduce a lot of the fear when it comes to hiring simply by doing your due diligence — and then some — during the hiring process. I get what you’re saying, though. It’s kind of a gamble anytime you hire someone. But if you do your job during the hiring process, I’ve found that in most cases it turns into an investment rather than a gamble. Even then, some investments are better than others.

In your line of work, you need a lot more than a warm body in a chair. You need someone who really cares about your cause and is really gifted when it comes to physically, mentally and spiritually involving people in the community. In a sense, a development person is kind of like a salesperson. Good ones are worth their weight in gold, while bad ones will only cost you a ridiculous amount of time and money, while potentially tarnishing your good name.

Look for the best of the best, and don’t rely on resumes to tell you the whole story. At my office, we always have numerous interviews, and the process can go on for months. We’re also OK with not hiring someone and putting the position on hold for a while if we can’t find the person who is an exact fit professionally and personally. And remember, Denise. Like with all things, it never hurts to ask God for a little guidance!

Sell house after fixing it OR sell as is

Dear Dave,

My husband and I are about to relocate to another part of the country. We’d like to sell our house, but we’re thinking about taking out a small loan to have some work done first. We could get in the $180,000 range selling it “as-is” but closer to $200,000 if we installed new roof, carpeting, exterior paint and concrete work. I know how you feel about debt, but what are your thoughts in this scenario?

Kim


Dear Kim,

From what you just described, and assuming the concrete work wouldn’t be too extensive, you looking at going into debt probably $12,000 to $15,000 in order to get $20,000 more out of the deal. I’d just sell it. I wouldn’t go to all that trouble for $5,000.

Every piece of debt you take on compromises your financial security and robs you of your largest wealth-building tool—your income. Even if you guys are in good shape, you’ve got a lot of uncertainty and the potential for unexpected expenses in the months ahead. Just sell the house and get on with your lives. It’s not worth the hassle.

—Dave

Finding a good roommate to live with

Finding a good roommate can be tough. You need to choose someone you like and get along with, but someone who is responsible and has a little maturity, too. Sometimes you’ll have different schedules, and this may lead to people working, studying or playing at all different times. You also have to be respectful of each other’s needs and values, and remember, too, that certain things about another person will eventually get on your nerves a little.

Spend a lot of time talking to people and try to find someone with whom you have a lot in common. You won’t always be on the same page with another person, but, if you take some time and try to choose wisely, it can be a fun and rewarding experience.

Husband and wife should make financial decisions together

Dear Dave,

My wife and I just started your class, and we’re determined to get out of debt. At the same time, I’d like to do something to reduce the stress in her life. She’s a nurse, and she works three 12-hour night shifts a week. I’m a teacher, and I think we possibly could get by if she cut down to just two nights a week and worked part time. Would this be a good idea?

Randy 

Dear Randy,

The truth is there’s no “possibly” involved. Even without knowing your income and other numbers, it all boils down to one simple question — can you live on that?

It’s a simple math thing. You need to look at your income and her income at 24 hours. Then, go over all of your bills and make a budget. If you can live on that, and it’s what she wants to do, you have the answer.

There’s no reason to do this immediately, either. I mean, we’re only talking about one day a week. Chances are it won’t change your lives that much. It probably won’t hurt anything if she works her regular hours through the end of the year. That way, you guys can keep looking at the numbers and decide on what’s best.

You obviously love your wife, Randy. But remember, this is up to her, too. Continue, with her, walking through the idea and the numbers. Make this decision together, so that you’ll both be happy and it will be a blessing in your lives.

Dave

Legal vs Moral responsibility

DEAR DAVE: Our family has an account at a movie rental store. I rented a movie the other day and forgot to take it back on time.

The late fees add up to $20. I'm in college and have a part-time job, so my parents think I should pay the late fees. They started the account, so shouldn't they have to pay the fees?

— Angie


DEAR ANGIE: Technically, I'm sure your parents are responsible for the account. But think about this. You're the one who rented the movie and forgot to take it back on time. If you have a job and access to money, I think you should be the one to make things right.

Chalk this one up as a learning experience, Angie. If you're grown up enough to be in college and have a job, then you're grown up enough to start cleaning up your own messes. That's the way life works. It doesn't mean that your parents don't love you. In fact, it means that they love you enough to teach you a valuable lesson in responsibility.

Lead by example to help younger siblings

DEAR DAVE: I'm having issues with my youngest brother and I need some advice. He's 25, divorced and has two kids. He only wants to play dad when it's convenient for him, and he's very irresponsible with money as well.

Our parents passed away a few years ago, so this leaves me to be the big brother and dad at the same time. I worry about him, but I'm not sure how to help him grow up. Any advice?

— Jeremy



DEAR JEREMY: One of the bad things about these situations is watching people you love do stupid things to themselves and the people around them. And I don't know that 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. Point out areas in your life where you made mistakes in the past and how you fixed the problems. But to go out and directly intervene in his life, trying to force him to be a man, would be a tough thing to pull off.

When I help people on my show, I have the benefit of them calling in and actually looking to me for help. These people actually care about what I think. I don't just walk up to folks and say, “You know, what you're doing there is really stupid. Let me fix you.” I think that's kind of the situation you're in right now. I would also begin to pray for him, and ask God to bring people into his life who will have a positive impact.

You never know what might happen, and asking God for help is never a bad idea. Who knows? He might even start dating some strong, mature young woman who'll jerk a knot in his tail and straighten him up.

Truth about cancelling credit cards

Dear Dave: I recently tried to cancel a credit card, and the customer service representative told me that doing this would cancel out my entire 14-year credit history. Is this true? — Keri


Dear Keri: 

No, it is not true. The rep you spoke with is either a moron or a liar.

Canceling a credit card doesn't erase a person's entire credit history, and it doesn't erase their credit history with that company or their card, either. And by the way, your credit history doesn't last 14 years. It lasts seven years, but all the information on your record that is older than that — except for Chapter 7 bankruptcy — comes off your credit bureau report. A Chapter 7 filing stays on your report for 10 years.

So, you don't have a 14-year credit history. Sorry, it's just not there. And if you talk to this company again, you really need to find an educated rep to speak with. This one doesn't have a clue!

-Dave

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Saving money and staying out of debt can make you a millionaire

Dear Dave: With all the economic problems in the country today, what can college students do to avoid money problems in the future? — Eric



Dear Eric 

There are always three or four things smart things you can do to protect yourself financially. One is to live on a budget. When you give every dollar you make a name, and write in down on paper, it helps you know what your money is doing instead of wondering where it went.

Two more good ideas are staying out of debt, and saving as much money as possible. Your money is your biggest wealth-building tool, and when you're saddled with debt, your money goes to creditors instead of into your pocket. Saving money is what prepares you for the good and bad things life throws at you — whether it's putting money aside to buy a car, a house or handling unexpected things that always happen.

Another thing is investing. I know you're young, but a little bit invested now could make you a millionaire when you're ready to retire. These are all simple things, Eric. But they'll make a huge difference in your financial situation now and in the years to come!

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Renting is a good option during uncertain times

DEAR DAVE: I live in Pennsylvania and I'm accepting a new job out of state. My wife and I will be in this new area for at least two years, and we're not sure if we should rent or buy a house.

— Ron


DEAR RON: Most of the time, as long as you're financially ready for such a big investment, buying a house is a good move. But if I'm in your situation and I'm not sure if it's a long-term thing, I'm going to rent until I see what the future holds.

It seldom makes a lot of sense to live in a place for two or three years and sell it, unless you get a ridiculously good buy at purchase and are able to sell for retail without any trouble. Even though the economy is finally, slowly turning around somewhat, I'm not sure that most properties in the current marketplace would go up enough in value in only two years to offset your cost of sale.

You're in a situation similar to lots of military families I help. Often, they'll be stationed somewhere for just two or three years. They'll buy something, they can't get it sold, and they end up with rental properties all over the country. Believe me, that wasn't their initial plan. Playing long-distance landlord is a pain in the rear!

Rent for now, Ron. Then, if you two decide you like the new job and new surroundings — and it turns out you're going to be there for a good, long while — start checking out the area for a nice home.


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Spenders vs Savers | Dave Ramsey

Some people have a tendency to live in the moment, while others think more about the future. 

Financially speaking, those who live in the moment tend to be spenders, while the other type tends to be savers. When you take these kinds of behaviors to unhealthy extents, you have extreme spenders or extreme savers. Either one can be an unhealthy thing.

Extreme spenders may need to slow down, grow up and learn the value of money by living on a budget, setting savings goals and working to meet these goals. Extreme savers often operate out of fear and uncertainty. In some cases, they may have an even worse spirit in their lives — greed. They have to learn that it's okay to have a little fun spending and to give generously.

When it comes down to it, there are only three uses for money: spending, saving and giving. You have to do some of all three in order to have a truly happy and healthy life.

Ignore the stock market doom and gloomers | Dave Ramsey on Fox Business News

Cars are a depreciating asset

DEAR DAVE: I'm trying to get out of debt. I make good money and do consulting for a living. I put about 4,000 miles a month on my car. It's a 2012 model, and I currently owe more on it than it's worth. I've considered selling it, but I'm concerned about reliability since I'm on the road so much. Do you have any advice?

— Chantel


DEAR CHANTEL: Rule of thumb No. 1 when it comes to your finances is you don't want too much of your financial picture tied up in things that are going down in value. Specifically, no one needs to have more than half of their annual income tied up in things that go down in value.

You're a road warrior, so whatever you drive, you're going to destroy. From a business perspective, you need a relatively low-mileage vehicle with good gas mileage that's reliable and safe. You also want something that's reasonably comfortable. Having said that, I would advise doing a lot of research and getting the least expensive car that meets all those criteria.

Since whatever you drive is going to be worth nothing in about 20 minutes, I'd start setting aside some cash every month as part of a monthly budget for a newer, better car. That way, when it comes time to put the old one down, you'll have a pile of cash to go along with your trade-in.

But even in your situation, Chantel, I would never advise buying a brand-new car or leasing a vehicle. From a financial standpoint, either of those moves would be just about the dumbest things you could do.

Tips and Tricks to sell your home | Dave Ramsey

DEAR DAVE: My wife and I moved to Washington, D.C., about a year ago, and we'd like to put our old place in North Carolina that we've been renting on the market. We'll be asking around $140,000 for it, so do you think we should consider professionally staging the home?

— Ben



DEAR BEN: It would make a lot of sense if you were talking about a million-dollar house, but with a less expensive home like that I'd just make sure it's really clean and neat and nice — especially the front area with the sidewalk and bushes. We're talking curb appeal here. Make sure the front door, trim and porch area are all cleaned or painted, too. All this is like a first impression on a job interview.

There shouldn't be any bad smells in the house, and everything inside should be crisp and clean, as well. You can stage it yourself with a few pieces of nice furniture and such, if you have it available. And try this old Realtor's trick to make things a bit more homey: Put a few drops of vanilla extract on a burner of the stove while it's heated. It will make the whole house smell like you've been baking cookies.

But no, I wouldn't pay to stage a $140,000 house.

Christian way to ensure you dont buy Stolen goods

Dear Dave: I own a small business specializing in cell phone repair. Sometimes I buy phones and parts on eBay. I can make sure the phones are not stolen by running a check on the serial numbers. However, I cannot be certain about the individual parts. Is there a way I can ensure I'm not dealing with stolen parts?

— Gordan



Dear Gordan: I would try to deal only with reputable sellers. eBay, I believe, has a ratings system and you have power sellers and so forth. Try to find someone who has a steady stream of cell phone parts, someone who's a reputable, long-time seller and doesn't appear to be a fence. eBay doesn't tolerate that kind of stuff if they can find it.

I would also do a reasonable amount of due diligence in terms of research. But at the end of the day, you can't completely guard against that unless it's a serial-numbered item. I wouldn't say never buy anything on places like eBay, but I would try to use some common sense and judgment.

I used to say I had a bad gut feeling. Then, a pastor friend of mine told me not to call the Holy Spirit a gut. It's not a gut feeling; it's God's spirit — listen!


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Helping someone drunk on debt

Dear Dave: My wife and I really got serious about your plan. We even sold our house to become completely debt-free. Now, we're trying to help my mom and dad. They liked your plan at first, and even taught Financial Peace University (FPU) at their church. Then, everything changed. They went out and leased a new car, bought another one on payments, and picked up a bunch of credit cards. They're trying to tell us that you really do this stuff too. How can we help them?   — Michael


Dear Michael: What you're describing is so inconsistent it's hard to grasp. I mean, how do you go teach FPU and then come back and claim Dave uses credit cards and does all those other dumb things? How do you do that then go lease a car and buy a new car and argue against what you've been teaching in a class? I don't know. But I do know that I don't mess with any of that stuff!

They're not really asking for your opinion. So, I don't think they can be helped until there's some kind of an opening. It's like the adage: "Those convinced against their will are of the same opinion still." I'd just tell them you're on different pages about this stuff. Let them know you love them, but that you're in complete disagreement on this topic and you're not going to argue about it with them.

There are always things you disagree about in families from time to time. But the truth is they went on a financial bender. When they wake up with a hangover, you might be able to help them, but right now they're drunk. They're financially drunk. They're buying everything in sight, and they're rationalizing it and justifying it.

Just pray for them, love them, and be in their lives. Continue to do what's smart, and try to avoid arguments. See where it goes from there. Maybe, when they sober up financially, they'll ask for some help.

— Dave

Looks can be deceiving specially when buying things on debt

Buy a home only when you can afford it

DEAR DAVE: We’ve made an offer on a house we really like through a first-time buyers program. Now, after looking over our budget and debts again, my wife and I are having second thoughts. We haven’t signed or turned in any paperwork yet. What do you think we should do? — Craig


DEAR CRAIG: I wouldn’t go through with the deal. I advise people to be debt-free before buying a home, because you want a home to be a blessing, not a curse.

Home-ownership when you’re broke is never a good idea. And basically, that’s the situation you’re describing. You have debt, and you’re trying to squeak into something with a first-time buyers plan. The translation? You have no money. 

Everything that can go wrong will go wrong. That’s Murphy’s Law, and he’ll move into your spare bedroom along with his three cousins — Broke, Desperate and Stupid.

Get your debts paid off, build up an emergency fund, and save up a good down payment before buying a home. I know that’s not the popular answer, but it’s the smart one.

Tough times call for tough measures

DEAR DAVE: My wife and I are thinking about selling our home. I was recently let go from the military due to downsizing, and I’ve begun a job in real estate but things are starting slowly. My wife brings home about $3,500 a month as a teacher, and the only debt we have is our house payment of $1,616 a month. I was given a $35,000 severance package, but we need some advice to help bridge the financial gap. Any ideas? — Erik


DEAR ERIK: Having little or no income is a lot harder than a variable income situation. Your wife is bringing home good money, but at the moment your house payment is almost half that amount. Are there some things you can do on the side while you’re getting your real estate business going that will create income? If you could make even $1,000 to $2,000 a month, it would change the picture entirely. You guys would be able to keep your home and have a little breathing room while you get your real estate career off the ground.

Looking at it from a long-term perspective, if you’re selling a bunch of houses a year or two from now, you’re in the clear. You could easily stay in the house. But if you don’t find extra income while you build your business, if you’re not willing to work extra hard and sacrifice in the meantime — even if it means just delivering pizzas — then you probably need to sell the house.

It takes about six to nine months to start making a living in the residential real estate business. So look at it this way: the more houses you sell, the less time you spend delivering pizzas. All this really hinges on is how badly you want a career in real estate and how much you guys want to keep your home. If you want it enough, you’ll do what it takes to get there. And for the time being that’s going to mean supplementing your income with something on the side while you grow your real estate business.

Buying a new car for business

DEAR DAVE: I’m self-employed, and I travel about 30,000 miles a year in my van. I’m three payments away from having the vehicle paid off, but it has 170,000 miles on it.

 
Do you think it would be a good idea for me to buy a new van and have the tax advantages that would go along with it?
— Doug


DEAR DOUG: There are two things you can do on taxes when it comes to your automobiles. You can straight-line depreciate them, which is what you do with expensive vehicles, or you can write off the mileage. That’s a good idea if you drive a lot. The thing is, you get the mileage whether you have debt or not.

Let’s say you bought a $25,000 van. If you depreciate that over five years, that’s $5,000 a year. If you made $65,000, and take $5,000 from that, you’d pay taxes on $60,000.
If you didn’t have that, you’d end up paying $1,250 in taxes. In other words, you’d be spending $25,000 over five years to save $1,250 a year on taxes. That’s a trade I don’t think you want to make.
 
Remember, too, that you basically destroy whatever you drive. You have to think of your vehicle as overhead. So, you’re going to destroy a $25,000 van or a $5,000 van all in the same period of time. 

As a businessman, which would you rather destroy? 
The answer is whatever is the least expensive and gets the job done.

You can qualify for home loan without a Credit score

When you stop borrowing money and don’t have any open accounts, your credit score will slowly disappear.

By the way, did you know that you can still qualify for a mortgage, even with no credit score? There are still mortgage companies out there that will do manual underwriting. It takes a little extra effort, but in my mind that’s a small price to pay.

I’ve never met a millionaire who prospered thanks to credit cards and their gimmicks.

Budget to wipe out debt

Dear Dave,
My husband broke a few ribs and his collarbone a couple of years ago when he flipped our ATV. He’s fine now, but we still have about $20,000 in medical bills because we were both between jobs and didn’t have medical coverage when the accident occurred. We also have two credit cards, one with a $1,000 balance and the other a $7,000 balance. We only have $200 a month we can put toward debt, so where should we start?

Dear Sandy,

Not having health insurance at any time of your life is not smart, regardless of being between jobs or not. Ouch, what a mess! You didn’t tell me what you guys make, but I can tell you a few things.

Number one, you’re probably going to have to get your income up. You may have to take on a couple of part-time jobs or work some overtime. My grandmother used to say, “There’s a great place to go when you’re broke — to work!” If you only have $200 a month to put toward your debt, you’ve got to create some margin, and that may be on the income side of things.

The other thing I’ve found is this: Most people seem to be able to magically find money when they feel it’s a life or death situation. “Magically” means that you do a budget. You make a written game plan where every dollar has a name before the month begins. When you write down every dollar, and you and your husband sit down and agree on where every dollar is going to go, you’re going to have an ah-ha moment that feels like you got a raise. If you’re normal, you waste a bunch of money because you don’t budget and have a written plan. And normal pretty much sucks!

So here’s the drill. Start living on a written budget, extra work, start working the debt snowball and pay off those debts from smallest to largest and don’t even think about a vacation or anything else that’s not necessity based until you clean up this mess. When you start living with a scorched-earth idea — beans and rice, rice and beans — I’ll bet you’re going to find a lot more than $200 in your budget to put toward killing off this debt!

— Dave

How to help homeless on food stamps

Reader: Recently, I met a young man who was put out on the street when he turned 18. He lives on food stamps and $10 a week. My wife and I are on Baby Step 7 of your plan and have a great income, and our whole family feels called to help this kid — maybe even taking him into our home. Do you have any advice?


Dave: You guys obviously have loving hearts and are doing great financially. But let’s take a look at few important factors in a decision like this.

If you’re thinking about actually taking him in under your roof, you need to remember that your first responsibility is to your family. You have to make sure they’re safe, and that would include finding out everything there is to know about this guy. Talk to his past teachers, coaches or even family members if you can find them. Spend some time just talking to him, too, and find out more about his background, attitude, habits and goals. Then, if you still feel led to open your home to him, make sure everyone involved signs an agreement with really clear rules and guidelines about what is expected, what will not be tolerated and the rewards and consequences of each.

Problem with cash back rebates is .....

Dear Dave,

How do cash-back rebates work on electronics and other items?

Dan



Dear Dan,

I like this question. Most consumers don’t think about how the process works. They only care that it’s benefiting them from a financial standpoint.

Let’s say you buy an item for $1,000, and you get a cash rebate for $100. Basically, you just paid $900 for that item, right? So, what the companies are trying to do is incentivize certain retailers to buy a particular product or amount of that product, yet sort of protect the sticker price in the minds of the consumers. To me, it’s really a little ridiculous. Why not simply take off the money and price it at $900?

That keeps retailers from jerking around with the margins. It purifies the process a little bit, but it adds to the hassle.

Good question, Dan!

— Dave

Family living in RV wants to upgrade their home

Dear Dave: My husband and I work and live in an RV. The vehicle is paid for, and I’d like to upgrade to a larger one, but that would mean taking out a $30,000 loan. We have $30,000 in savings, including our emergency fund, and we make $55,000 a year. What are your thoughts? — Renee


Dear Renee: I think what you’re doing with your lives is kind of cool. But I can’t advise financing something that will go down in value as quickly as an RV. I wouldn’t even do it on the basis that it’s going to be your primary residence.

Let’s look at things from a different angle. First of all, I think your emergency fund is a little high. I recommend three to six months of expenses, and on a household income of $55,000, holding $20,000 in reserve would be a lot. If you kept $15,000 in the bank, that would leave you with $15,000. If you’re talking about a $30,000 upgrade, you’d only need to save up another $15,000.

See where I’m going with this? With a little patience and planning, you can have your upgrade in the not-too-distant future and still have the peace of mind that goes with knowing you have a reasonable emergency fund sitting in the bank! 



VIA http://www.thespectrum.com/story/news/local/2015/06/20/ramsey-need-something-matters/29046079/

Motivation to make budget when you make enough money

Dear Dave: My wife and I are in our 20s. We have no debt and $50,000 in the bank. Our income is $90,000 a year, and we’re cautious to live on less than we make. Still, we can’t seem to get motivated to make a budget. How can we get inspired to do this? —Isaac


Dear Isaac: Two of the biggest motivators we have are pain and pleasure. Financially, you guys don’t have any pain. You’re killing it! So, we’re going to have to figure out something associated with pleasure.

I think you need to look for something bigger than money to push you. You guys need to ask yourselves, “What are we saving for?” On a bigger scale, ask yourselves, “What can we do with this money?”

It sounds to me like you both realize money can’t be the goal. And that’s a good thing. You guys are obviously smart, gifted people. I’m sure you have ideas and goals, dreams and desires. Talk about them and write them down. By doing this, you’ll be taking the first steps toward making these things reality. When you have something specific that you want money to do, it gives you a reason to make it behave.

God calls us to manage well the resources He gives us, so that we’re able to do good things for His kingdom and His people. Broke people can’t give, so my advice would be to use your talents and resources for the good of others. —Dave

Dont follow the Jones and Joneses

The Joneses are broke. They have a lot of bills, ridiculous car payments and tricked-up mortgages. But at least they look good! Have you seen Mrs. Jones’ hair? Wow! That’s fancy! But despite the good hair, stop trying to keep up with the Joneses. You don’t need her hair, and you don’t want their debt following you 

Cosigning a car loan with family can be bad idea

Reader: My wife co-signed a loan on a 2007 car for her sister. Now, it’s being repossessed, and $23,000 is still owed on it at 20 percent. What can we do in this situation?


Dave: Tell the bank or dealer where the car is, and tell them to come pick it up. There’s no way to get out of the rest, my friend. You and your wife are going to be liable for whatever the car doesn’t bring in afterward. Let’s say it sells for $4,000. That would be subtracted from what is owed, and it will still be up to you guys to pay the rest. You could always try to negotiate to settle it for pennies on the dollar. Based on what you’ve told me, that’s a best-case scenario.

The other thing I would do is demand a full audit on the account because a 20 percent interest rate doesn’t explain why a car didn’t pay off — especially a $23,000 car. If this was a $5,000 car from a tote-the-note car lot, and they were ripping her off charging only interest — and that’s all anyone was paying, and she gave up and punted — that’s fine. You’re just looking for a little understanding of the situation. But $23,000 cars don’t generally have 20 percent interest. That’s a pretty freaky deal, and I’d want to know where the money went.

From a bank’s perspective, I don’t see how anyone would think something like this would work out. The car was going down in value the entire time, so it just doesn’t make sense to me. Of course, if you have the cash lying around and it wouldn’t damage your finances, you could just take care of things and call it Stupid Tax.

Co-signing on a loan, especially with family, is never a good idea.

Dave Ramsey on frequent job changes

Reader: I’ve been in my current job for five years. I’ve also had a second job for three of those years, but now I’d like to make a change. Do you have any advice on how to convince a potential employer that I’m a good hire, even though I had a couple of jobs in the past that I quit after a month or two?


Dave: Quitting a job after a month or so isn’t normally some kind of sin that automatically disqualifies you from being hired. It might be with some corporate goober who’s looking at things through some silly, one-size-fits-all hiring paradigm, but that alone wouldn’t be the kiss of death around my office.

Now, would we look at something like that and want to know what happened and what your explanation was? Absolutely. But if it made sense, there wouldn’t be a problem. However, if it made you sound flighty or disgruntled with things in general, we’d probably pass.

My guess is that the fields you’re interested in are like most — there’s a lot of importance put on who you know. And I don’t mean this in a negative way. Work and try to develop good relationships with people in your field and those associated with it. If that’s in place, they can honestly give out positive references.

Knowing someone within the field or at the company, or being connected to someone with a positive reputation, can help you avoid the resume slush pile. It can help cut through the mess and achieve clarity.

Keep emergency Funds and Loans in separate banks

 Dear Dave: My wife and I are debt-free except for our home, and we’re currently putting money aside for our fully loaded emergency fund of three to six months of expenses. Currently, we have our emergency fund account in the same bank as our checking and savings accounts. Do you think we should move it to a different bank?

Steve



Dear Steve: I wouldn’t worry too much about that if I were you. The only exception to that might be if you had loans that you owed to that same bank. Then, I would probably move my emergency fund out of there just in case something went wrong with the loans.

Some commercial loan documents now give the bank the right to take money out of your account to pay the loan — without your permission. If you had a car loan, for instance, with that particular bank, I wouldn’t keep a bunch of money in that bank. They normally don’t do that unless you’re way behind on the bill — and then it gets pretty adversarial.

Sometimes there can be things like a simple clerical error, and there’s no chance of that happening if the money’s in another bank. But in your situation, I don’t see any harm in you being there.

Dave

How to budget

 Dear Dave: I have a question about budgeting. I give myself and my husband $150 a month each for blow money to be used on whatever we want. I’m upset because he spends all his eating out, then he buys other things he wants that he has no money for. Am I being too stingy?

Cheryl


Dear Cheryl: I think you guys are handling your money poorly. You’re acting like his mother instead of his wife, and he’s acting like a little boy instead of a man. You don’t want to give your husband an allowance and then not be happy when he spends money “he didn’t have” because he went over what you dictated to him. That’s a bad budget process.

The budget process, if you’re the nerd in the family, should start with you writing it all out. Then he sits down with you, has an equal say in the decisions and you two okay it together. He needs to understand that this is you asking him to man-up and be part of the decision-making process, so that you can both be in agreement as to what’s best for the family. In one sense, you may not like it at first, because right now you’ve got control of things. But in another sense, I’ll bet you’re pretty tired of carrying the weight of all the financial decision making and being the only adult in the household.

He doesn’t even have to work on all that much. I want you to lay it out, but I expect him to sit down and go over it all with you. You’re not asking him to be an accountant with a pocket protector, but you have every right to expect him to be in on the decisions that are made about your family and your finances!

Dave

Should you borrow to buy a car

Dear Dave,

My wife and I are on Baby Step 3 of your plan. We’re also saving up to buy a car with cash. We’re about $3,000 away from our goal, but now my wife wants to go ahead and finance the rest. She has started wondering what the difference is in borrowing to buy a car and borrowing to buy a house.

— Lex


Dear Lex,

This is a good question. It sounds like you guys have made good progress, but now one of you is running out of steam. That’s OK. Getting out of debt and staying out of debt can be a tough road.

For one thing, cars go down in value. The second thing is I don’t like debt of any kind. I don’t really like borrowing for a house even, but I tolerate it as long as you use a 15-year, fixed-rate mortgage with payments that are no more than a fourth of your take-home pay. I mean, it’s a much larger purchase. You can get a great car for $15,000 to $20,000 dollars. Depending on where you live, a good home can cost you 10 times that or more.

Still, the best way to build wealth and have a high-quality financial life is to not be in debt. You’re never going to win with money in the long term if you can’t learn to delay pleasure. That’s the bottom line. Personal finance is about controlling the person you see when you look in the mirror.

Every one of us has that little 4-year-old kid inside, a little kid whose name is Immaturity and who wants what he or she wants right now. What your wife is asking is a normal request, but it’s also a sign that we all have to address that little kid that’s inside us once in a while — and tell that kid no.

— Dave

High income with high expenses

Dear Dave,

My wife and I have just started getting on track with our money. We have $2,000 in savings, and the only debt we have is our house and two cars. I work in the oil and gas industry and make about $180,000 a year, but things are pretty volatile right now. We’re upside down on both vehicles, and we owe $39,000 on one and about $48,000 on the other. Under the circumstances, should we go ahead and build a fully funded emergency fund or work on paying off the cars?

— Kendall



Dear Kendall,

Are you kidding me? Sell the cars.

You need to go to Kelley Blue Book’s website right now and find out what your cars are really worth. Then, put them on the market as a private sale. You’ll get thousands more selling them that way than you will at a dealership. You’ll have to talk to a local credit union or bank for a small loan to cover the difference, plus a little bit more so you guys can get a couple of little beaters to drive for a while.

You’ve got close to $100,000 in car debt hanging over your heads. That’s a disaster. I want you to take a moment and think about how things would be without these stinking car payments. Your lives would change completely.

Hopefully, you’ll be able to keep your job. But this car debt is the scariest thing I’ve heard in a long time, even with your great income. Get rid of those things now.

— Dave

Rewarding kids for grades and house work

Dear Dave: What's your opinion on rewarding kids with money for getting good grades in school?

— Joe


Dear Joe: Honestly, I don't have a strong opinion about it one way or the other. We didn't pay our kids for good grades, but I can't really think of a strong argument not to pay them for success in school. You could say you shouldn't pay them because it's something they're expected to do anyway, and that's somewhat valid. But you could also make the same point where chores around the house are concerned, too.

We paid our kids to do some chores, but really the point is not about the economic value. It's the fact that you want your kids to associate work with money. I still meet people my age and older who haven't made that connection. Work creates money, and that's an important thing to teach your kids. Once they've created some money by working, then you want to use those moments to teach them to save, spend and give wisely.

You can do this around the subject of grades if you want. There's probably a valid case to be made that getting an "A" takes a lot more work than getting a "C." You're certainly not obligated to pay them for work or grades, but if you don't do some of this — and teach them the proper ways to handle the money they earn — you'll miss out on a lot a fantastic teachable moments.

— Dave 

Need to be mentally strong to run your own business

An entrepreneur is the only person I know who can go from sheer terror to sheer exhilaration and back every single day. You've got to have a strong mind and heart to make things happen, and it will be a rough ride if you don't have both. Plus, it won't last long if you don't absolutely love what you're doing.

Everybody wants to be successful in their job and make lots of money, but personal happiness is just as important. If you wake up jazzed about what you're going to do every day, chances are you'll be successful and happy. But if you wake up dreading the day and your job, then I can almost guarantee you won't be successful financially or happy.

VIA http://www.postbulletin.com/business/dave-ramsey-the-safety-of-gold-is-a-myth/article_27728a6d-1887-52c0-87e3-cc16d4b961d3.html

Dave Ramsey does not like Gold for investment

Gold has this weird allure and mythology around it that says, “I’ve still got something that people will take when the economy crashes.” But the truth is there hasn’t been an instance when people used gold as a medium of exchange in a crashed or failed economy since the Roman Empire.

People still use gold because they believe in it. We also believe in green paper with presidents’ faces on it. So, gold really has no more intrinsic value than that green paper. The only reason we place value on it is because we, the society, place value on it. A failed society might not place value on it anymore.

In a completely failed economy, the first step is usually a takeover by a fascist government. After that, you get a new color of money — of paper — with a new leader’s face on it. Then, the old stuff isn’t worth anything. It’s very seldom you ever see gold come to the rescue.

I don’t believe in investing in gold for that reason. Plus, the track record on gold, as far as a rate of return, is horrible over the long haul. There was a time a few years ago when everyone went crazy on it, but other than that? Ugh!

Losing hope is to lose everything

When people have lost their hope they've lost their energy. When they think the only light at the end of the tunnel is an oncoming train, they don't believe.

Bicycle before car payment

I'd ride a bicycle before I have a car payment. The average car payment in America is $478 a month over 84 months.  If you invested that from age 30 to age 70 instead of paying a car payment, you'd have 5.6 million dollars.

Fan asks Dave about her Student Loan being in default

Dear Dave: I have a student loan in default that is now being handled by a collections agency. They want me to pay the entire $20,000 now, or consolidate it with $16,000 in collection fees added. Are these my only options?



Dear Rebecca: There's no way I'd consolidate and pay $16,000 in collection fees. Right now, they're trying to bully you. They may eventually garnish your paychecks, but I think you can still work out something with these guys.

You'll have to repay the loan, and probably the interest and some of the late charges, but $16,000 is a bunch of crap. Don't run out and get another loan to pay it, but don't let yourself be blackmailed, either. You've made a mess by ignoring this for so long, so now you'll have to save every penny you can and start sending them substantial amounts of money each month.

Trust me, they'll take your payments and cash the checks. Hopefully, you can settle on a reasonable repayment structure and have this thing killed off in a couple of years.




http://www.idahostatesman.com/2015/02/07/3632691_dont-be-bullied-by-collections.html

Baby steps to get out of debt

The biggest thing about getting out of debt is really getting angry about it. You've got to get ticked off about living your life in such a way you're going to retire broke and that you work too hard to be this broke.

Money, communication important in a marriage

Many marriage counselors will tell you if a couple comes to agreement on four major issues — money, kids, religion and in-laws — they have a greater chance of forming a successful and lasting marriage.

I believe it’s vitally important that financial decisions are made by husband and wife together — as one.

Most women value communication in a relationship, and the process of doing a monthly budget together will be a wonderful sharing experience for the two of you.

Money isn’t the most important thing in the world. But the way a couple handles money is representative of their dreams, passions and fears. It’s also indicative of their vision for the future.

How to handle Child Support payments

Question: I receive child support payments for my two kids from my ex-husband. My new husband and I are using your plan to improve our finances, but we can’t agree on how to handle these payments. I’ve been keeping it in a separate account. He thinks we should combine it with the rest of our house money and budget. What do you think is best?


ANSWER: I don’t blame you for being protective of the child support money. I’m sure the feelings you have stem from a desire to protect your kids. But if your new husband is a good guy, one who’s kind, loving and willing to treat these kids like they’re his very own, then my opinion is the money should go into the pile where it helps take care of the kids and family.

Your job as a parent is to be a blessing to your kids. That means feeding them, clothing them, educating them and giving them a good home. As long as these things are happening, and we’re talking about a functional, loving marriage, then all the money should be combined and be part of the family. Put it right at the top of your monthly budget, along with all your other household income.

Money is important, and I’d expect you to make sure your kids and your cash are treated properly. But I’m talking about two responsible people being involved in a happy marriage, too. A healthy, loving relationship is one of the best gifts any couple can give to their kids.



http://www.dallasnews.com/business/personal-finance/headlines/20150104-dont-drop-coverage-on-the-car.ece

Dave Ramsey does not like Lifecycle funds

I hate the Lifecycle funds; they’re awful. They adjust your investments automatically and the adjustments are uber, crazy conservative. If you’re in the TSP, I recommend putting the vast majority in the C plan. It is the premiere plan of the entire TSP. It is more like an index fund and it has done very well. I would put 80% into that, 10% into the S, and 10% into the I.


VIA http://blogs.fedsmith.com/2015/01/04/i-hate-the-lifecycle-funds/