Dave Ramsey: Student loans are mistaken for regular loans

The thing most people don’t realize about student loans is that a lawyer doesn’t have to be involved for them to garnish your wages. It’s a lot like the IRS in that they don’t have to sue you in order to take your wages. Congress gave them that power because it’s a federally insured loan. And in my mind, that’s way too much power.

Advice for small business with high expenses

Dear Dave,
I own a small business, and I'm having trouble scaling up while keeping expenses down. Do you have any advice for me?
-Josh

The best advice I can give you in a scenario like this is to take a deep breath and accept the fact that you need to slow down and grow slowly and steadily. If you let expenses get out of hand, you'll be chasing them and playing catch up for the life of your business. Overhead kills businesses, Josh. It's the death knell.

Daughter makes lot of money as model

Dear Dave,
I live in Los Angeles, and my daughter makes $3,000 to $5,000 a month modeling. I don’t want her to become spoiled by this job and the income, and I need advice on what to do with the money. Should it be put aside for a car, and do you think she should have to pay for something like that herself?
-Lisa

Dear Lisa,

So how do we keep a high-income, high-profile job from ruining this little girl? I think a lot of it has to do with her interaction with you, and how you gently mold her work ethic and attitude. Don’t let her become a diva. She’s not there to be fawned over or placed on a pedestal. She’s there to serve. That means working hard and doing the best she can. That’s her job whether she’s flipping burgers or making $5,000 a month modeling. The money’s nice, but what we’re really doing is making sure she learns some important life lessons. And you’re still being a parent, not a friend or peer, through every moment.

When it comes to the money, you guys should sit down and discuss some goals for the future. I think it’s important that any car purchase be reasonable, because the best thing a kid this age could do with that kind of money is save up for college. Even if she goes to school on a full scholarship, she should be driving something low-key. Just because she gets a free ride in college doesn’t mean she gets to cruise the streets in a Lamborghini. Set the rest of it aside for when life really begins—after college.

As her mom, it’s very important that you teach her these lessons now. It’s essential, too, that you don’t surrender the position of parent, teacher and leader. Chances are when this young lady is 34, no one will give a flip that she modeled for a while as a teenager. The most important things here are the lessons taught and learned, not the money.

-Dave

Character and giving lessons for kids

None of our kids receive any kind of financial help from us at all, unless they’re already carrying their weight in their own lives. That’s not being cold. It’s teaching responsibility and self-reliance. Now it would be different if one of them developed a serious medical issue or something like that. But the whole idea that mommy and daddy have lots of money, and I can just get some from them? That doesn’t fly in our family.

You have to teach them character and giving in order for them to be valid recipients. Plus, it’s all about the kids’ attitude. But you’ve got to talk about it often and communicate the value system out loud. The gifting and generosity are contingent upon the humility that leads to gratitude that leads to contentment.

2 types of business expenses

There are two types of expenses: fixed and variable. Variable expenses rise as the volume and size of your business grows. A good example of this would be shipping. The more stuff you move, the higher your shipping bill. Fixed expenses are there regardless of your income. Rent is a fixed expense. The amount doesn't change, and you have to pay it whether you're making money or not.

Who is Dave Ramsey ?

Dave Ramsey is America's most trusted voice on money and business. He has authored four New York Times best-selling books: "Financial Peace," "More Than Enough," "The Total Money Makeover" and "EntreLeadership." The "Dave Ramsey Show" is heard by more than 5 million listeners each week on more than 500 radio stations.

Dave Ramsey: Dont give up if you cant make your payments

If you’re having trouble making your payments, don’t just throw up your hands and default. Talk to them about a deferral, and keep sending them whatever you can. It’s always better to be proactive than reactive in situations like these. Let them know you want to make good on your obligation, and ask what you can do to make this happen under terms you can afford.

Reader asks Buy or Rent house

Dear Dave,
My wife and I just bought a business with cash. We had been living with my brother and sister-in-law while we saved up, and things are starting to get a bit cramped. My brother has offered to co-sign on a house for us, but rent is pretty cheap in this area. What do you think we should do?


You need to forget about a house and plan on renting for a while. You just bought a business, and at this point you don’t even know if it’s going to be successful. Plus, if you need a co-signer to buy a house, car or anything else, it means you’re not financially ready for that purchase.

Take some time, maybe two or three years, to get your business up and running. Go find a decent, inexpensive place to rent then pay off any debt you have while saving up as much money as possible. I want you to have a nice house one day, Peter. But you’re just not ready now. A house should be a blessing, not a burden.

Dave Ramsey on Vanderbilt College vs Tennessee

Studies show that college education is the one expense where people do not consider the cost of the product against what they actually get for their money. It costs $52,000 a year to go to Vanderbilt….the average cost of public universities is $6,000 a year. 

Is Vanderbilt a better school than most public schools? Probably. 

But is it TEN TIMES better? Probably not, since I went to University of Tennessee & I have guys working for me that went to Vanderbilt.

Doesnt make sense

Nearly 70% of consumers live paycheck to paycheck…Fifty-five percent of Americans say they ‘always’ or ‘sometimes’ worry about their money…anyone else find those numbers a little funny?

What—are the other 15% of people on Prozac?

Advice for teaching children about money

I think there are three key factors when it comes to teaching children of any age about these concepts—humility, gratitude and contentment. In my mind, humility is where gratitude comes from, and gratitude leads to contentment.

I’m generous to my adult children, but they have no sense of entitlement. That’s due to their personal humility. They don’t feel that I owe them anything, and they already know that anyone who cops an entitlement attitude gets cut off. You’re no longer qualified for my generosity when you lose your gratitude.

You’ve got to spend time talking to kids about these things. Otherwise, you run the risk of them counting on the income. Here’s an example. We coach some family businesses at my company, and the best family businesses are the ones that teach non-employee family members who receive money from the business—dividends from the profits—never to live on those dividends. I’ve seen lots of cases where someone will start living on the business they don’t work in, and they immediately start feeling entitled to the money.

The same principle applies in your situation. If someone starts saying, “Well, since mom and dad are paying for our daycare, we can use that money we would have spent to buy a car.” That means they’ve started counting on mom and dad’s generosity to live, and that’s a form of entitlement mentality.

None of our kids receive any kind of financial help from us at all, unless they’re already carrying their weight in their own lives. That’s not being cold. It’s teaching responsibility and self-reliance. Now it would be different if one of them developed a serious medical issue or something like that. But the whole idea that mommy and daddy have lots of money, and I can just get some from them? That doesn’t fly in our family.

You have to teach them character and giving in order for them to be valid recipients. Plus, it’s all about the kids’ attitude. But you’ve got to talk about it often and communicate the value system out loud. The gifting and generosity are contingent upon the humility that leads to gratitude that leads to contentment.