Helping your parents financially - yes or no

Dear Dave,

My dad has been really bad with money his entire life. Anytime he would get into trouble, my grandparents would always bail him out. This time he came to my wife and I, asking for $350 to get out of overdraft at the bank. We’re trying to live on a budget and get control of our finances, and $350 would make things kind of tight at the moment. What do you think we should do? — Jeremy

Dear Jeremy,

I understand feeling an obligation to help your dad. But there’s a lesson here that dad needs to learn, and it’s something that goes much deeper than the money or helping out a family member.

You have to do the right thing, no matter how dad reacts to this. Right now, the right thing is taking care of your family and not putting them in jeopardy. So my answer to dad would be no. Another thing that needs to happen is for the definition of “help” to change. When you say he’s been irresponsible with money his whole life, giving him $350 won’t help — and it will make you an enabler. Just handing him $350 will actually hurt him, and it will give him the idea he can continue being dumb with money and hit you up for cash anytime.

Like I said, I understand the pull of helping out a parent. So if you feel this is something you absolutely must do, I would advise making the $350 contingent on the fact that he begin and complete a financial counseling course. Be gentle when you talk to him, and let him know it hurts to see him struggling. But let him know, too, it’s his responsibility to work through his debts and take care of his own finances!

Fees to maintain an LLC are minimal

Dear Dave,
My wife and I are debt-free, plus she has a business giving music lessons. We formed an LLC last year when she had several students and was making over $3,000 a month, but that all changed when our first baby arrived. Now, she has only a few students, and they bring in around $700 per month. Should we dissolve the LLC? — Ben


Dear Ben,

First, congratulations on being debt-free and new parents. Happy New Year to you all!

In most states, the only upfront cost for an LLC is the money you pay for the initial setup. There may be a small fee for a business license and subsequent annual renewal, but that generally doesn’t add up to much. Then, there’s the money you pay for filing your tax return on the LLC once a year. Even if you live in a state where there are other fees to consider, as long as the cost of maintaining the LLC wasn’t killing you, I’d recommend keeping it in place. You went to the trouble of opening it, and you just might use it again someday. Even if your wife is staying home with the baby, she just might be able to take on more students again as time goes by.

Just be reasonable and use common sense. If you spend $3,000 to stay open, and you’re making $700, you’d dissolve it, right? But as long as you don’t have fees that are making you cringe, I’d probably leave it in place.

Husband has two cars

Dear Dave,

My husband has two trucks, one of which is a work truck at his construction site. It's in really bad shape, and he wants to take $16,000 out of savings to buy another one. We only have $17,000 in the account. What should we do? — Caroline

Dear Caroline,
Your husband wants to drain your savings to buy a $16,000 vehicle and roll it up to a construction site? I think this guy has been watching too many macho-man truck commercials.

In the real world, some hard hat will run into it with a piece of heavy equipment or drop a load of bricks off center and put some big time damage on this truck before he puts 1,000 miles on it. He wants to buy way too much truck. This kind of decision will wreck your finances and spell bad news for the business, too.

You can buy a perfectly good work truck for $6,000 or $7,000, and that's what he needs to do. This truck is going to get destroyed, and trashing an inexpensive truck is a much better idea than trashing the family finances! — Dave

Wife has cancer, what should we do

Dear Dave,

My wife and I have been married for 12 years. Last month we found out she has terminal cancer and only six months to live. We've been fortunate enough to become fairly wealthy during our lives together, and she wants to buy me a boat. We always went fishing together, and her last wish is for me to have the boat I've always wanted. Even with this prognosis, I'll be okay financially when she's gone. Still, I can't stand the thought of this. It's just too painful. Do you have any advice? — Andrew

Dear Andrew,

Buddy, I am so very sorry. I hope you realize that you have the sweetest woman on earth for your wife. Even with all she's going through, her thoughts are of you and your happiness. That is one amazing lady.

The first thing I'd tell you both is to make sure your faith is intact. Hug her a lot, and keep talking to, praying with, and loving on each other. Be there for her all you can, and keep in mind that doctors can be wrong. It happens a lot, believe it or not, so don't give up hope.

If she brings up the boat again, just smile and let her know it's all about her right now. Remind her that she did the nicest thing possible many years ago when she agreed to spend the rest of her life with you. If she's really stubborn about this idea - something tells me she is, and in the very best way possible - promise her that whether you win or lose this fight you'll buy that boat someday and name it after her.

In other words, just tell her the truth and be real. If she goes home to be with the Lord, there might come a day down the road when the pain you'll feel has dulled just a little, and you find yourself sitting on that fishing boat that's named after her. That would be okay. I'm sure she would be smiling at you while you reeled in a big one. But you've got more important things to take care of right now - namely her.

God bless you both. 

Police pension plans contribution

Dear Dave: I work for the police department, and I’m required to contribute 9 percent of my paycheck toward my pension. I know you recommend putting 15 percent toward retirement, so I was wondering if I should put an additional 6 percent into this plan or go with something else. — Brian

Dear Brian: Your pension is probably pretty stable if you work for a police department, so if you feel good about your position and the returns you’re seeing, I’d be okay with you putting the extra 6 percent there – maybe even a little bit more.

If you’re feeling iffy about the pension, I’d recommend putting the remaining 6 percent in a Roth IRA invested in good growth stock mutual funds. Make sure these funds have strong track records of at least 10 years.

I’m glad to know you’re serious about saving, Brian. By planning for the future now, you can look forward to retiring with wealth and dignity! — Dave

Debit cards are superior to Credit Cards

Dear Dave: I’ve followed your plan for three years. I’m living totally debt-free except for my home, and I pay for everything with cash. It’s so freeing! I’d like to convince my family to stop using credit cards and follow your advice too. How can I do this? — Allen

Dear Allen: It does feel great, doesn’t it? Congratulations! I’m really proud that you’ve worked hard, been disciplined, and taken control of your money.

When it comes to your family, however, I’m not sure that words will do the trick. There’s an old saying, “Those convinced against their will are of the same opinion still.” Some people are just stuck in their ways and have been brainwashed into believing that credit cards and debt are an unavoidable part of life.

Trust me, I know what I’m talking about here. I’ve been fortunate enough to help millions of people change their lives, get out of debt and take control of the finances. But there are millions more who just won’t listen. They just keep going deeper and deeper into debt. As much as I want to help people, I had to accept the fact long ago that being stupid with money isn’t illegal.

You can make some irrefutable arguments against credit cards. You don’t need them to get a hotel room, rent a car or buy airline tickets. A debit card will do all of that without piling up debt. For an emergency fund, you can simply save up cash. It takes some discipline and hard work, but relying on credit when things go wrong is a trap.

If they won’t accept these points, try telling them your story. Don’t leave out the part about old habits being hard to break, but stress how great your life has been – both financially and emotionally – since you made the decision to control your money. Maybe a light will come on, and you can walk them through the process! — Dave