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..
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!
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
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
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
