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Dave Ramsey Says June 18 2018

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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

5 ways to hit reset on your financial goals

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By Rachel Cruz

Summer is coming to an end, which means we are more than halfway through the year. What about those resolutions you made for 2018? If you’re like most people, they probably went out the window during summer vacations. We’ve all been there!

With the holidays right around the corner, now is the perfect time to hit reset on your financial goals. Before you know it, you’ll be busy booking holiday travel plans, buying gifts for loved ones and enjoying other festivities.

No matter how you’re doing, you have plenty of time to get back on track. Here are a few ways to reach your financial goals before 2018 comes to an end:

Make some adjustments

Maybe your New Year’s resolutions weren’t realistic, or you had something pop up that drained your emergency fund and slowed you down. Life happens, and it’s okay to adjust your goals. Look at where you are financially today and decide where you want to be by the end of the year. Don’t be afraid to set new goals for yourself, too. You can start making progress toward your future today. Just make sure you factor in the amount of time left in the year as you reset your goals to ensure they’re attainable.

Get back to budgeting

A budget is the most important thing when it comes to winning with money. If you don’t tell your money where to go, you’ll wonder where it went! Assess how you’ve spent your money over the past few months. Look for areas where you can cut back (dining out, groceries, new clothes), and put that money toward your goals. Trust me, you’ll feel less stressed.

Plan ahead

It’s September, which means we’ll be decking the halls before you know it. At this point, you can count how many paychecks you have left until the holidays. The last thing you want to do is spend money you don’t have. In 2017, roughly 74 percent of Americans said they failed to budget properly for the holidays and racked up an average of $1,054 in debt. Plan ahead by adding a line item to your budget for holiday spending. Aside from gifts, don’t forget to factor in travel expenses, charitable giving, and parties. Start setting this money aside now so you can enjoy the holiday season guilt-free.

Stay motivated by tracking your progress

You’ve got your budget, so now you just have to make sure that you stick to it and stay motivated. Tracking your progress can be one of the most helpful ways to do this. When you can visualize your progress, you’ll be excited by those quick wins, you’ll be less tempted to spend what you don’t have, and you’ll be motivated to keep going. I’ve created a free goal tracker that you can download at www.rachelcruze.com to make this part easy and fun!

Focus on what matters

Sometimes we want things so badly they start to feel more like needs. Do you really need the newest iPhone? Do you really need to replace your outdated computer? These things are nice to have, but they’re not must-haves. With social media today, keeping up with the Joneses is harder than ever. And who would want to anyway? Don’t compare your life to someone else’s highlight reel. Focus on your goals and the things that really matter in life.

You don’t have to wait for a new year to set new goals, or make progress toward the goals you’ve already set. In order to win with your money later, you must be intentional today!

 

 

About Rachel Cruze:

As a #1 New York Times best-selling author and host of The Rachel Cruze Show, Rachel helps people learn the proper ways to handle money and stay out of debt. She’s authored three best-selling books, including Love Your Life, Not Theirs and Smart Money Smart Kids, which she co-wrote with her father, Dave Ramsey. You can follow Cruze on Twitter and Instagram at @RachelCruze and online at rachelcruze.com,youtube.com/rachelcruze or facebook.com/rachelramseycruze.

Dave Says September 18 2018

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Sell personal car to help pay business debt?

Dear Dave,

My husband started his own one-man, small business as a handyman a little less than a year ago. He has netted $17,000 in that time, but the business has about $13,000 worth of debt. We’ve always kept personal finances and business separate, but what would you think about us selling one of our paid-for cars to help with the business debt?

Robin

Dear Robin,

There’s nothing wrong with small beginnings. On top of that, you should always keep your business and personal finances separate. Aside from the debt, it sounds like he’s off to a good start.

I think you’ll be able to pay off the debt from your future income. If your husband started his business less than a year ago, he has spent that time trying to get things off the ground and working with very little name recognition. If he’s good at what he does, and he continues to work hard and market himself properly, he should be able to double what he made in the last year.

To do that, however, he’s going to have to spend some time in accountant mode. He needs to figure out the types of jobs he makes the most money on for the time he puts into them. I know a guy in our area who made more than $100,000 as a handyman in the last year. I’m talking about $100,000 in profit! His prices are higher than most in that line of work, but he’s the best. He provides superb quality work, and he’s always polite, on time, and on schedule.

If your husband does the research and crunches some numbers, I think he can dial it in and make a lot more moneythan he’s making now. Find that sweet spot, and he’ll continue to grow the business!

—Dave

Forgive the debt?

Dear Dave,

Recently, I loaned some money to a good friend. He’s going to help me with a big home project over the next few weekends, so do you think I should pay him for the work or forgive the debt?

Marvin

Dear Marvin,

First, I don’t recommend loaning money to friends or family. Once in a while, things may work out and everyone ends up happy. But in most cases, it changes the dynamic of the relationship. The Bible says the borrower is a slave to the lender, and there’s a lot of truth in that — financially and emotionally.

The big question is whether you’ve already agreed to pay him for the work. Another consideration is how he views the situation. He may be looking at this as just helping a buddy, and he still owes the money.

Ask him what his expectations are before you guys start the job. Just talk to him, and figure out what seems fair to you both. If you’ve already agreed on a certain amount, and the value of the work is close to what you loaned him, you might discuss the idea of paying back the debt that way.

But in the future, if someone close to you really needs financial help — and you’re not enabling bad behavior in the process — just make the money a gift.

—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 600 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

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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 Says March 29 2018

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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 Ramsey Says April 17 2018

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Laptop dilemma

Dear Dave,

My husband and I are just starting Baby Step 1 of your plan. Prior to this, we told my two nephews we would buy them laptop computers for college. They don’t get a lot of encouragement or support from their immediate family, so we try to help them when we can. Should we go ahead and honor this commitment, postpone getting our starter emergency fund in place, and possibly take on a little more debt, or bow out of the agreement?

Lisa

Dear Lisa,

Well, it’s difficult to be generous when you’re broke. You don’t even have $1,000 to your names, and you’re going to buy two laptops? I don’t know how much debt you have, or what your household income is, but I do know neither of you have managed your money very well in the past.

If you make $50,000 a year, and you have $70,000 in debt, you should sincerely and apologetically bow out. Explain that you made a big mistake, and just be honest about why you can’t provide the laptops. If you make $200,000 a year, but you’ve just been incredibly silly and lazy with your money, you should buy the laptops and then get serious about growing up and getting control of your finances.

Don’t make promises, financial or otherwise, you can’t keep. I know this is a tough, embarrassing situation, but it’s what I would do if I were in your shoes.

—Dave

Tiny home depreciation?

Dear Dave,

Do you think the value of a “tiny home” would depreciate like a trailer?

Romeo

Dear Romeo,

That’s a tough one. I’m not certain they would depreciate like a trailer, but I don’t think they would go up in value much, either.

Anytime there’s a very limited demand for something, the price or value doesn’t generally increase. And there are very few people looking to buy tiny homes. The tiny home movement is kind of a niche thing. It’s a very narrow market, and something that doesn’t have a lot of demand isn’t going to appreciate.

I would avoid the tiny house movement if I were you, Romeo. Don’t invest in things that don’t have proven track records and don’t go up in value. I love real estate, but not tiny real estate!

—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 Says May 2, 2018

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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

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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.

5 Financial Priorities for Your College Student

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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 April 5 2018

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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.

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