march / april 2024
12 dave says
Featuring the advice of personal finance expert and best-selling author Dave Ramsey , the Dave Says column is filled with timely , relevant questions and answers taken from actual letters and calls on Ramsey ’ s radio program , The Dave Ramsey Show .
A LESSON HE ’ LL REMEMBER FOR THE REST OF HIS LIFE Dear Dave , Our 21-year-old son is in college , and we ’ ve always warned him to stay away from credit cards . Despite our warnings , we recently learned he got a store-branded credit card . The good news is he has stayed under the credit limit . The bad news is he has never made any payments on the purchases he made , and now he owes about $ 3,800 . He ’ s a good student , and my husband and I want to look at this as a young person ’ s one-time mistake . Do you think we should pay off the card for him just this once ? – Melinda
Dear Melinda , Believe me , I understand you wanting to help him out . It means you ’ ve got a good heart , and you love him . No parent likes seeing their child in a bad situation .
There ’ s a reality here , though , I hope you won ’ t overlook . It ’ s his debt , not yours . He knew what he was doing when he signed up for that credit card . He knew what it meant , what was expected , and he ’ s the one who should make good on the repayment . There ’ s nothing unfair about that .
Now , you ’ re right . This is a typical young person ’ s mistake . And like a lot of mistakes our kids make , it ’ s one that ’ s bad and wonderful at the same time . It ’ s bad because if he had just listened to you and his dad , he would ’ ve avoided the whole mess . It ’ s wonderful , though , because it gives you two the opportunity to provide him with a real world , teachable moment .
At this point , my advice is for both of you to give him a great big hug , and lovingly explain where he went wrong and why it was a bad idea . If you want , you can even go a step further , and help him find a part-time job if he doesn ’ t have one right now , so he can pay off his debt and get out of this mess . It ’ ll take some planning and discipline on his part , but leave the payments to him . Hopefully , by the time he finishes working his tail off — and scrimping and saving to pay this debt — he will have learned a lesson he ’ ll remember for the rest of his life . — Dave
IT ’ S WORTH THE SACRIFICE Dear Dave , I switched to a debit card so that the money I spend comes directly from my checking account . But I still have a problem some months with overspending and buying things I shouldn ’ t . Do you think I should stop using my debit card ? – Debbie
Dear Debbie , When I made the decision to get intentional with my money , I just used cash . It ’ s hard to spend it when you don ’ t have any on you . It ’ s a tough thing , I know , but you have to make a conscious decision to start living differently . You ’ ve got to get mad at the things that steal your money a dollar or two at a time enough to take action .
Try looking at your life as a whole , not a moment at time . All the moments you ’ re living right now will have either a positive or negative effect on your future . I decided I wanted the greater , long-term good , so I gave up on the short-term stuff .
Debit cards are great tools . You can ’ t spend money you don ’ t have with them like you can with a credit card . But you ’ ve still got to budget very carefully for each month , and give a name and a job to every single penny of your income . Otherwise , you can still overspend . — Dave
PUT THE MONEY IN YOUR OWN POCKET Dear Dave , Are home warranties a waste of money if you already have a fullyfunded emergency fund containing six months , or even more , of expenses set aside ? – Jodie
Dear Jodie ,
I don ’ t do extended warranties , because they ’ re not a good deal . In my mind , you ’ re better off to self-insure against damage or things breaking down . That way , you can put what would have been profit and marketing dollars for theextended warranty company in your own pocket . I mean , think about it . If you buy something , but can ’ t afford to fix it if something goes wrong , it ’ s not really a smart move to buy it in the first place , is it ?
I always recommend an emergency fund of three to six months of expenses to cover the unexpected things that life will throw at you . In most cases , this amount of cash — sitting in a good money market account with check writing privileges — will allow you easy access in the event of unexpected expenses or a financial emergency . — Dave
Dave Ramsey is an eight-time national bestselling author , personal finance expert and host of The Ramsey Show . He has appeared on Good Morning America , CBS This Morning , Today , Fox News , CNN , Fox Business and many more . Since 1992 , Dave has helped people take control of their money , build wealth and enhance their lives . He also serves as CEO for Ramsey Solutions .