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
Monday, May 11, 2015
Tuesday, April 28, 2015
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
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
Monday, March 30, 2015
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
— 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
Monday, March 9, 2015
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.
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
Monday, March 2, 2015
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!
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!
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