74.9 F
Waurika
Saturday, August 18, 2018
Home Dave Ramsey Says

Dave Ramsey Says

5 Financial Priorities for Your College Student

0

By Anthony ONeal

If you’re the parent of a child already attending or about to enter college, you probably have a lot on your mind. That’s understandable. College is an exciting time of life, full of big choices and exciting opportunities. But let’s face it, it’s also a stage of life that can bring temptations — money troubles in particular.

If you have a few concerns about how your child will handle their money in college, you’re not alone. I’ll never forget my own early financial experiences as a young college student—or the day I opened my first credit card bill and saw what I owed.

“Man, that was an expensive pizza!”

The folks who signed me up told me my credit card came with a free T-shirt and a pizza. I got both of those, but they were far from free. They came with consequences no one had warned me about. It started with a few thoughtless purchases—a dinner out, a shopping spree for gifts—but it added up quick.

Somehow, I hadn’t realized the stuff I was buying and enjoying on credit was going to come due as a bill. Throw in the student loans I had taken on, and I was getting into some serious financial trouble. Before I knew what was happening, I was 19 years old, $25,000 in debt, and — for a short time — even sleeping in my car.

But here’s some encouragement. I made it all the way back, got out of debt, and learned the right way to handle money. And your child can win with money, despite a world of pressure to do otherwise. It’s true! As a youth pastor and speaker, I’ve met, worked with, and walked beside many young people who graduated college as strong budgeters, with a clear plan for the future and no debt. So can the college student in your life!

The Big Five

While your child is in college, they can lay a solid financial foundation by focusing on just five priorities for managing their money. With this foundation in place, at least two great things will happen for them: They will be in a strong position to build wealth throughout their life, and they will gain an awesome amount of self-discipline to help them in their career.

  1. Save a $500 Emergency Fund. It might not sound like a lot. But $500 is usually enough to see a college student through most of the financial emergencies that come up, like a broken phone or computer. I know you’re going to want to help them out as you’re able, but it’s also a great idea to let a young person feel what it’s like to solve a money problem with their own money, instead of using yours or a credit card.
  2. Get Out of Debt. You probably remember from your own time on campus that college students are a major target for credit card companies. Help your child understand that going into debt is no way to start adulthood. If they already have credit cards, encourage them to cut those up and pay them off. The sooner they’re debt-free, the sooner they can begin using their money to go after their dreams.
  3. Pay Cash for a Car. Most college students will need a car either right away or soon after graduating. But the need for wheels is no excuse to take on a big monthly payment. Paying cash will save your child a lot of money, and they will get a lot more enjoyment from something they actually own.
  4. Pay Cash for College. You’ve probably noticed student loans are getting out of hand in America. In 2016, The Wall Street Journal reported that the average college student is graduating with more than $37,000 in student loan debt to pay back. That’s insane! Let your child know that paying for tuition and books is no different than paying for food and gas. By paying for college with cash they’ll immediately be able to use their pay for things they want, instead of paying off debt for years.
  5. Build Wealth and Give. This one is my favorite, because there’s no better feeling than the one you get while using your money to help those you care about. As Jesus himself said, “It is more blessed to give than to receive.” And who has the most freedom to do a lot of good with their money? Those who have been fortunate enough to stay out of debt and build wealth.

One more tip: It’s easy to assume you can only build this foundation if you begin early enough in life. Believe me, that’s not true. It’s never too early to start, but it’s also never too late. Whether your child is just beginning to think about college, or is already enrolled, they can apply these principles to take full control of their money — in school and beyond!

About Anthony ONeal

Since 2003, Anthony ONeal has helped thousands of students make good decisions with their money, relationships and education to live a well-balanced life. He’s the National Best-Selling Author of Graduate Survival Guide: 5 Mistakes You Can’t Afford to Make in College, and travels the country spreading his encouraging message to help teens and young adults transition into the real world. His latest book and video kit, Teen Entrepreneur Toolbox, released in April 2018.

You can follow Anthony on Twitter and Instagram @AnthonyONeal and online at anthonyoneal.com or facebook.com/aoneal.

Dave Says May 22 2018

0

It takes two

Dear Dave,

My husband has an old car that has become a real sticking point between us. He bought it for $2,400, and it needs about $4,000 in repairs and restoration. Together, we bring home $50,000 a year, and I feel like this car is interfering with our ability to save money and pay off $35,000 in debt. We already have two decent cars we drive to work, so what should I do about this?

Stacy

Dear Stacy,

There are lots of guys out there who like shiny toys — especially cars. I get it, because I’m one of them. But these kinds of things are luxuries, and stuff like this should wait until the household and finances are in order. The family should always come first.

Dumping money into this while you two are struggling financially doesn’t make sense. On top of that, it’s causing problems between you two on a deeper level. I’m sure your husband isn’t a bad guy, so try sitting down with him and explaining how it makes you feel. Let him know what it’s doing to your finances and your marriage. You might even write the financial side down, so he can see exactly what kind of shape you two are in and where the money is going.

Once you do this in a kind, but concerned, manner, it may be a real eye-opener for him. On top of that, you might consider giving him a little incentive to get on board with the idea of getting your finances in order. Suggest that once the debt is gone, and you’ve got some savings in place, there might be a little extra cash on hand to help get that car up and running.

Good luck, Stacy!

—Dave

Postpone the marriage?

Dear Dave,

My fiancé and I are planning to be married in less than a year. We’ve both been through your class at church, and the other night we started wondering if we should wait to have the wedding until we’re both completely debt-free. Would you give us your opinion?

Michelle

Dear Michelle,

Congratulations! I hope you two will have long and happy lives together.

To answer your question, I don’t think there’s a reason to wait. When two people know they really love each other, they should get married whenever they feel in their hearts the time is right.

At this point, you shouldn’t be thinking about money as anything except an indicator of where you’re going. It doesn’t matter who got into debt or how, because everyone makes mistakes. But if you’re both serious about getting out of debt, living on less than you make, and are in agreement about how the dollars are going to be handled, then — where money is concerned — you’re ready to be married.

Many relationship experts say if a couple can agree on four important things — kids, money, religion, and how to handle the in-laws — they have a great statistical chance of a happy marriage. I believe this, too. And make sure you meet with your pastor for some good, pre-marital counseling before the big day. With all this going for you, I think you two will be okay.

God bless you both!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Dave Says April 5 2018

0

Getting rid of the car

Dear Dave,

How do you sell a vehicle with a lien amount that’s higher than the actual value of the car?

Michael

Dear Michael,

First, you need to find a way to cover the difference between the amount of the lien and what you can get for the car. Let’s say the car is worth $12,000, and you owe $15,000. That would leave you $3,000 short.

The bank holds the title, so unless you give them the payoff amount of $15,000 you’re not getting the title. The easiest and simplest way would be if someone buys the car for $12,000, and you had $3,000 on hand to make up the difference. If you don’t have the money to make up the difference, you could go to a local bank or credit union and borrow the remaining $3,000.

I really hate debt, but being $3,000 in the hole is a lot better than being $15,000 in the hole. Then, you could turn around and quickly pay back the $3,000 you borrowed.

You’d give the total amount owed to the bank, they would give you the title, and you would sign it over to the new owner. Hope this helps!

—Dave

Stop spending completely?

Dear Dave,

My mom and dad are following your advice, and they are working hard to get out of debt. I was wondering, is it okay to buy things while you’re paying off the debt you already have?

Leslie

Dear Leslie,

I’m glad you’re paying attention to the finances around your house. Of course, there are some things you must have. We call these “necessities.” Most things are not necessities, though. If your air conditioning breaks down, or you have car repairs, those are things you must spend money on to fix. Things like new furniture, vacations, and eating at restaurants are not necessities. They’re things you might want, but they’re not necessary — especially when you’re trying to pay off debt.

I always recommend people take a hard look at their priorities, and remember there’s a difference between wanting something and needing something to survive. It can be hard, and it may mean everyone has to go without a few things they want for a while. But if your parents are serious about getting out of debt, they’ll do it. And it really won’t take all that long.

Great question, Leslie!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Dave Ramsey Says February 8, 2018

0

Quit job for school?

Dear Dave,

My wife and I have $72,000 in debt from student loans and a car loan. We’re trying to pay off our debt using the debt snowball system, and we each make about $45,000 a year. She’s a teacher, and she’s planning on going back to school for her master’s degree, but she’s thinking about quitting her job to do this. She’ll be able to make more money with the additional education, and she would only be unemployed for two years. The degree program will cost us $2,000 out of pocket per semester for two years. Does this sound like a good idea?

Chris

Dear Chris,

There’s no reason for your wife to quit her job to make this happen. Lots of people — especially teachers — hold down their jobs and go back to school to further their education. I’m not sure trying to make it on one income when you’re that deep in debt is a good idea.

Whatever you do, don’t borrow more money to make this happen. Cash flow it, or don’t do it. We’re talking about $8,000 total, and you’ve got $72,000 in debt hanging over your heads already. My advice would be to wait until you’ve got the other debt knocked out, then save up and pay cash for school. You could slow down your debt snowball, and use some of that to pay for school, but I’d hate to see you lose the momentum you have when it comes to getting out of debt.

The choice is yours, but don’t tack on anymore student loan debt. I know her income will go up with a master’s degree, so from that standpoint it’s a good thing to do. But if you do a good thing a dumb way, it ends up being dumb!

—Dave

Pre-planning explained

Dear Dave,

My grandmother passed away a week ago. She was 98, and I know both she and my grandfather had pre-paid for their funerals in 2004. However, there were outstanding costs of $1,500 with the funeral services we had to pay out of pocket, because she had outlived the insurance policy attached to the pre-payment plan. I know you say it’s always better to pre-plan, not pre-pay, for a funeral. Can you refresh my understanding of this?

Rebecca

Dear Rebecca,

Let’s use a round figure, and say the cost of a funeral is $10,000. What would $10,000 grow to 25 years from now if it were invested in a good mutual fund? Now, juxtapose that number with the increase in the cost of a funeral over that time. The average inflation rate of consumer-purchased items is around four percent. So, the cost of funerals, on average, has risen about four percent a year. By comparison, you could’ve invested that money, and it would’ve grown at 10 or 12 percent in a good mutual fund.

Now understand, I’m not knocking folks who are in the funeral business. But lots of businesses that provide these services realize more margin in selling pre-paid policies than they do in caskets. In other words, they don’t make as much money selling the casket as they do selling a pre-paid policy on the casket.

Do you understand my reasoning? If we knew the exact date she pre-paid, and how much she pre-paid, that figure invested in a good mutual fund would be a whole lot more than the cost of a reasonable funeral. It’s the same principle behind the reason I advise folks to not pre-pay college, or just about anything else, that’s likely far into the future. The money you could’ve made on the investment is a lot more than the value of pre-paying. Pre-planning, on the other hand, is a great idea for many things — including funerals.

I’m truly sorry for your loss, Rebecca. God bless you all.

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Dave Ramsey Says June 18 2018

0

Stop playing with silver and gold and pay off that debt!

Dear Dave,

I make about $240,000 annually, and I will be maxing out my 401(k) contributions this year. I have $60,000 in student loan debt I’m trying to pay off, a small amount left on my home mortgage, plus I’ve been investing in a lot of gold and silver. Those investments are worth about $30,000 right now. In addition to this, I’ve got $10,000 in cash just sitting in a savings account for emergencies. Should I stop the gold and silver investing, and focus on paying off the loans, or keep splitting my money between them?

Adam

Dear Adam,

I’d stop investing in gold and silver completely. I don’t put money in precious metals at all, because they have a lousy long-term track record.

My advice would be to cash out every bit of your gold and silver, and put the money toward paying off your student loans. That would instantly cut your student loan debt in half. Then, with your salary, you should be able to pay off the rest in just a few months.

The key will be to start living on a very strict budget. Don’t spend on anything that’s not absolutely necessary. I also want you to temporarily stop contributing to your 401(k). Do this just until you get the student loan debt wiped out, then pick it up again like before. If you want to put even more toward retirement, you could check with a quality investment professional — one with the heart of a teacher — to see if you’re eligible for a back-door Roth IRA. When it’s all said and done, Adam, I want you to have 15 percent of your yearly income going toward retirement.

You already know the value of saving and investing. With your income, once you knock out your debt and begin investing again, you have the very real potential to become a millionaire in just a few years!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.S

Dave Says March 29 2018

0

Access to my checking account?

Dear Dave,

Will paying my taxes online give the government electronic access to my checking account?

Ashley

Dear Ashley,

If you use your checking account, of course they will have the ability to withdraw that money from your account. I believe I know where you’re going with this question, and I think you may be a little confused about my stance on this sort of thing.

There’s nothing wrong with certain entities having access to your checking account. I use electronic bill pay for utilities, mutual fund contributions, and things like that all the time. The only time I warn people against giving electronic access to their bank accounts is when they’re dealing with collectors over a bad debt. The government — even the IRS — isn’t known for coming in and randomly taking money out of people’s accounts. Collectors, on the other hand, do it all the time.

You’re in a fight when you’re dealing with a debt collector. It’s an adversarial relationship. As a rule, no one in that industry should ever be given electronic access to any of your accounts. There may be a few decent debt collection companies out there, but many of them will lie, cheat, and steal to get your money.

I hope that clears things up, Ashley.

—Dave

Many already know

Dear Dave,

How can I convince my fellow millennials that government isn’t the solution to their problems?

Josh

Dear Josh,

I think you’re proceeding from a false assumption. Many millennials already understand it’s not the government’s job to take care of everyone and provide everything. The problem, I think, is there’s a group of people in every generation that wants someone else to take care of them.

The only thing I can suggest is that you try to be kind to everyone. It does no good to have a political discussion with a political neophyte. If you have friends like this, perhaps you could suggest they work to control and improve the variables in their lives they can actually control and make better — namely themselves.

You can’t control the variable of government, Josh. It’s not going to come to your rescue. It never has.

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Dave Says May 2, 2018

0

First, lay a solid foundation

Dear Dave,

When is it okay to have a little fun, and buy things you want, when you’re following the Baby Steps plan?

Kaitlin

Dear Kaitlin,

The time for a little fun is after you’ve completed the first three Baby Steps. Baby Step 1 is saving $1,000 for a beginner emergency fund. Baby Step 2 is paying off all debt, except for your home. And Baby Step 3 means you go back and add to your emergency fund until you have three to six months of expenses set aside.

Once you’re debt-free except for your home — and you have your emergency fund completed — you’ve laid a solid, financial foundation for your life. That’s when you can have a little fun and spend some money on a vacation, new furniture, or something like that.

Children think about their immediate wants and do what feels good. Adults, on the other hand, devise smart, logical plans, and stick to them. I want you to have a great life, but you have to put in some hard work and say “no” to yourself sometimes in order to attain that great life!

—Dave

It’s Baby Step 1 for a reason

Dear Dave,

I’ll be receiving my income tax refund soon. It will be enough to completely pay off my two smallest debts, or get my starter emergency fund of $1,000 for Baby Step 1 in place. What should I do?

Brandy

Dear Brandy,

I love that you’re excited about using your refund to start the Baby Steps, and begin gaining control of your finances. But we call the beginner’s emergency fund Baby Step 1 for a reason.

Bad things can happen while you’re working to get out of debt. That’s why I want people to get a little money set aside before they start Baby Step 2, which is the debt snowball. What if the alternator on your car goes out, or your refrigerator dies? Life happens, and things go wrong. When this kind of stuff pops up, and you don’t have any money set aside, you’re likely to quit the plan and wind up going even deeper into debt.

I know you want to get out of debt. I want you to get out of debt, too. But I want you to stick with the plan, and actually get out of debt, instead of falling off the wagon the first time you hit a bump in the road!

Dave Says May 14 2018

0

Save up, or get a mortgage?

Dear Dave,

I’m 28, single, and I just became debt-free. In addition, I make $70,000 a year and have the equivalent of six months of expenses set aside for emergencies. Should I save up to pay cash for a house, or is mortgage debt okay? I’d like to keep the price of a new home between $200,000 and $225,000. Since I currently live in a nice apartment, I think I can save about $20,000 a year. What do you think?

Kathryn

Dear Kathryn,

It sounds like you’re in great financial shape. Congratulations on becoming debt-free!

Let’s take a look at both scenarios. If you can save $20,000 a year, that means you’re about 10 years away from a nice, paid-for home, and you’re still debt-free. That’s one option. At the same time, I don’t yell at people for taking out a 15-year, fixed-rate mortgage, where the payments are no more than 25 percent of their monthly take home pay. In this situation, you could save like crazy for a couple of years and make a big down payment on a home in the price range you’re talking about. Then, you could pay off that house in just 15 years.

I honestly don’t have a problem with either solution, Kathryn, but think about this. Wouldn’t it be great to have your own home, and still be completely debt-free, at 40? It’s something to think about!

—Dave

Stand up to them!

Dear Dave,

A debt collection agency started calling my office a few weeks ago. I gave them an initial payment, and made an agreement to pay off the debt in monthly installments. This morning, they started calling me at my office again wanting payment. Can I legally demand they not call me at my place of employment?

James

Dear James,

Absolutely! You have a legal and moral obligation to pay your debts, and I’m glad this is something you recognize. But collectorshave rules they must follow. They’re governed by law just like everyone else.

Be certain to keep your end of the agreement. Make your payments on time, or early, whenever possible. Then, if they call you at work again, remind them of your initial payment and the terms of the agreement already in place. Be polite, but firm, and demand that they never call you at your office again.

In addition, send them a certified letter, return receipt requested, so you’ll have proof you sent the letter and they received it. In the letter, let them know that — according to guidelines set forth in the Federal Fair Debt Collection Practices Act — you are demanding they not call you at your office again.

If they call you there after receiving this formal demand to stop, they’ll be in violation of federal law. If that happens, let them know you’ll talk to a lawyer and sue them.

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Dave Ramsey Says February 15 2018

0

Your retirement, your money

Dear Dave,

I’ve been following your plan, and I’m ready to start investing. Do employer contributions count toward the 15 percent you recommend putting into retirement?

Brenda

Dear Brenda,

Investing 15 percent of your income in retirement accounts is Baby Step 4 of my plan. That means you’ve already paid off all your debt, except for your home, and you’ve increased your $1,000 beginner’s emergency fund to a fully-funded emergency fund of three to six months of expenses. Way to go!

I want you to control your destiny, so employer contributions do not count toward the 15 percent I recommend setting aside for retirement. The first thing you should put money into is a matching retirement account. If you’ve got access to a 401(k) — and your employer offers a match — you should do that up to the match before anything else.

It’s nice if your company will match up to a certain point, but chances are that will still mean you’ve got some work to do. To make up the remainder, you could look at a Roth IRA. Then if the Roth, plus what you invested previously to get the match doesn’t equal 15 percent, you could see about a 403(b) or go back to your 401(k) to complete the 15 percent.

You’re doing great, Brenda. Keep up the good work!

—Dave

Precisely detailed

Dear Dave,

My mother wants everything, except for her home, left to my brother and I when she dies. She would like her long-time boyfriend to have her house. We don’t have a problem with this, but it has not been written into her will. Her mind is still sound, so does she need to officially update the will?

Dawn

Dear Dawn,

Yes, the will needs to be changed to reflect her wishes where the house is concerned. Since she’s still able to make decisions independently, the will should be legally updated to reflectexactly what she wants to have happen with every piece of her estate.

It’s fine if she wants to give her boyfriend the house. It’s your mom’s will, and her estate, so she can do pretty much whatever she wants. She could also leave what’s called a life estate that says her boyfriend gets use of the home while he’s alive. Technically, in this kind of situation the house would be left to you, but he would legally have use of it during his life. Upon his death, the home could then revert to you or your brother.

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

Dave Ramsey Says February 22 2018

0

Debt and income crisis

Dear Dave,

I received a call the other day from a company saying it could negotiate the balance on my credit cards to a lesser amount. The caller also said they could get me a zero-percent interest rate until the debts were paid off, and then the accounts would be closed. I’m kind of starting over again financially, because I sold a company I had run for almost 15 years, then got into real estate and lost almost everything. I’m making just enough to squeeze by, and my credit card debt totals $40,000. Would this be a good idea?

Bill

Dear Bill,

No, this is not a good idea. You’re looking at two major problems with a company such as this one. One, they will absolutely destroy whatever credit you may have. Their plan is to take your cash, and spend some time beating down the credit card companies until they agree to accept a lesser amount. Then, they use your cash to settle loans you will have — by that time —defaulted on. This will put you in a situation very similar to if you had filed Chapter 13 bankruptcy. Stay away from these people.

You have an income crisis, in addition to a debt crisis, at this point. For starters, I want you to start living on a tight, written, monthly budget. I’m talking rice and beans, no vacations, and no eating out until you pay off this debt. Where your income is concerned, maybe you should consider getting back into the kind of business you ran previously for a while. Look for a managerial or supervisory position in that area, at least until you’re able to get back on your feet and save some cash.

Finally, cut up the credit cards, close the accounts, and put as much money as you can spare toward paying off that debt using the debt snowball system. Never go back into debt again!

—Dave

Pay off house first?

Dear Dave,

My husband and I are in our forties. We have no children, and we bring home $95,000 a year combined. We’re also debt-free except for our home. We owe just $10,000 on the house, and can take care of that in a few months. Would it be okay to rearrange the Baby Steps a bit, and pay off our home before getting serious about saving for retirement?

Nan

Dear Nan,

I don’t usually give folks any wiggle room when it comes to sticking with the proper order of the Baby Steps. But if you’re that close to being completely debt-free, I don’t see anything wrong with paying off the house first.

Most people I talk to still have anywhere from $100,000 to $300,000 left on their mortgages. This is a little bit different story, however, and you two are obviously managing your money well.

Knock out that mortgage, and start pouring at least 15 percent of your income intoretirement. You’re going to love the feeling — and the freedom — that comes with being completely debt-free!

—Dave

* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

FOLLOW US

1,720FansLike
363FollowersFollow
280FollowersFollow
0SubscribersSubscribe
- Advertisement -

RECENT POSTS