Dear Dave,
We are debt-free except for our home, and we have six months of expenses set aside in our emergency fund. Every time we do our monthly budget, we set aside a small amount of personal spending money for us both. Do you see anything wrong with this?
DeAnna
Dear DeAnna,
There’s absolutely nothing wrong with having a little fun money calculated into your monthly budget when you’re in good financial shape. The problems start when couples don’t agree on these kinds of things — or worse — when they start hiding stuff and lying to each other about where the money’s going.
People either grow together or they grow apart when they get married. When you start hiding things from your spouse you’re essentially keeping separate lives. That’s a bad sign in any marriage, and in many cases, this kind of thing leads to divorce.
Having an agreed-upon budget isn’t just telling your money what to do. It’s also an important part of a healthy sharing and communication process between husband and wife!
—Dave
(Close up small business?)
Word count: 286
Dear Dave,
I have a small business, and I love what I do. Unfortunately, things haven’t been going well the last several months. On top of that, I’ve committed a lot of money to advertising in the coming year. Recently, I got a great job offer from a company that would pay me twice what I’m making now. What do you think I should do?
Hugh
Dear Hugh,
If it were me, I’d want to keep my options open. Closing your business would mean giving up all your customers. I’m not sure that’s a good idea when the offer has just been made, and you know so little about the actual job.
If you think this new job is something you might like, why not accept the offer and see if you can continue your other work on the weekends? That would help cover some, if not all, of your advertising commitment. Plus, it would keep some money rolling in if the new job doesn’t work out.
If you find you like this new job, then you’ve got a great income and something you like doing on weekends that pays. If you keep your business open — even on a small scale — there’s always a chance it will begin to grow again. Who knows? It might give you the opportunity to jump back into it full-time somewhere down the road!
—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.
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Dear Dave,
My brother and I recently received an inheritance after our mom died. He’s never been very good with money, so I was proud of him when he used his portion to pay off his debts. But then he went out and financed a van that I know he still can’t afford. I’m afraid he’s falling right back into the same old money problems, but I don’t know how to talk to him about it.
Diana
Dear Diana,
I’ve learned, after years of writing books, doing a radio show and trying to educate folks about their finances, you can’t make people listen to you. Even with what I do for a living I don’t throw my opinion around unless someone asks.
I think you’re smart for realizing there are some boundaries here. But there’s no reason you can’t create a situation where he can ask your opinion. You might begin with talking about some of the mistakes you’ve made in the past. This could help him connect with you, and feel more comfortable opening up about his own situation. Once he realizes you haven’t repeated the same mistakes, and have a better life for it, he might just ask how you did it. Then, the door is open!
But you can’t become preachy every time someone does something dumb. That will only hurt their feelings and cause them to tune you out completely.
—Dave
(Reward her good choices)
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Dear Dave,
Our daughter wasn’t very responsible with money until she read your books. Now, she has really started turning her life around. Recently, she learned she needs to have some expensive dental work done. Since she just started trying to manage her money well, she doesn’t have enough saved up for the procedure or dental insurance right now. Do you think we should help by loaning her the money?
Dianne
Dear Dianne,
I like what you’ve told me about your daughter. She doesn’t need to worry about dental insurance though. You almost never get back what you put into those policies. It’s the kind of stuff a good emergency fund will cover. If she has invested her time and money into what I teach, I’d say she’s pretty serious about getting her finances in order.
If it were me, I’d make the money for dental work a gift, not a loan, for turning her financial life around. In your description you never mentioned anything about your daughter being lazy or unwilling to work. You talked about a young lady who’s just starting to build her life, and you’re rewarding smart choices. I think that’s a great idea and will have a major positive impact!
—Dave
* Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com
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Dear Dave,
My wife and I are still paying off debt, so we didn’t budget anything for Christmas. How much do you think we should spend on close friends and family members?
Dan
Dear Dan,
Not having a budget for Christmas probably isn’t a great idea if you want to have a happy marriage! It’s really not that difficult. I don’t know if there’s a certain amount that works for everyone, because everybody’s circumstances are different. But you must have a plan when holidays or other special occasions come along — especially when you’re trying to get out of debt.
If you have kids, you certainly need to budget for them. They may not get everything they want, but there’s no reason there can’t be something from Santa under the tree. You also need to budget a little something for your spouse. The good thing is you can have a little fun with these gifts and make them more from the heart than the wallet.
What if you gave your wife a coupon that says you’ll cook a real dinner for her and the kids once a week for the next three months? Or perhaps it’s a voucher for a free back rub any time she’s feeling stressed and tired. Maybe you could find a nice but inexpensive frame and put a favorite picture of the two of you inside. Things that come from the heart, or that include little acts of kindness or serving the other person, can go a long way. Those kinds of things are especially meaningful to most folks during the holiday season.
Trust me, Dan. You can have a wonderful, loving, quality Christmas without spending a lot of money. You’ll have to spend a little here and there, but just make sure it’s an amount that’s appropriate for your financial situation. If you’re making $200,000 and trying to get out of debt, that’s one thing. But if you’re making $20,000 a year and trying to get out of debt, you need to do things that are creative and don’t require a lot of cash!
—Dave
(Bargaining with respect)
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Dear Dave,
My husband and I are looking at getting a second vehicle. We found one we like, and it’s in great shape, but they’re asking more than we can afford to pay. How do you make a low offer without making someone angry or insulting them?
Angela
Dear Angela,
It’s always a smart move to try and stay on the seller’s good side. You want to be classy and diplomatic, and never point out the bad things about an item someone’s selling just to drive down the price. If you insult their merchandise or insinuate the price is unfair, you’re likely to blow the whole deal right off the bat.
How about this? Tell them it’s a fine vehicle, and their price is fair, but the amount they’re asking is outside your budget. Let them know how much you want to work out a deal, but, in order for it to fit into your lifestyle, you can only pay a certain amount. You might throw in that a lot of people are selling things right now because of the economy, and you’re just looking for the very best deal.
Maybe that, and letting them know you’re standing there with money in hand, will help swing this thing in your favor. Good luck, Angela!
—Dave
* Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com
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Dear Dave,
My husband and I are following your plan, and we’re trying to reconcile our on-paper budget with what’s going on in our bank account. Most of our bills are due the first half of the month, but we receive most of our income during the second half of the month. Can you help us figure out what to do?
Kathy
Dear Kathy,
If you’re actually making a budget and sticking to it, what you’re describing is a cash flow bind. You are in charge of your budget until it’s on paper. Once it’s on paper, it has to accurately represent reality. In your reality, that means a cash flow strain on the first checks and extra money on the second checks.
You won’t be able to fix this in just one month, but there is a long-term solution. Move some of the money from your second checks into the first half of the next month. By doing this, you’ll start running from the fifteenth to the fifteenth instead of from the first to the first. It will help you stay ahead and avoid getting pinched.
The second part of this equation is that you are in charge of your budget. The budget does not become the boss of you until you get it done. When everything is written and agreed on by you and your husband, that’s when the budget becomes the boss. You can’t come home with a new shirt or a new purse and hope it fits into the plan. The budget has to be the plumb line by which you build your finances straight and true!
—Dave
(School cost versus salary)
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Dear Dave,
My husband and I both work two jobs. Together we make about $53,000 a year, and we’re trying to get out of debt. We have $35,000 in debt, and most of that is on our truck. I’d like to go back to school and become an ultrasound technician, so we’ll have more money. Do you think this is a good idea?
Sarah
Dear Sarah,
Getting more education is always a good idea. For starters, I’d begin doing some research to find out what ultrasound technicians in your area are earning. Then, look into the cost of training at a nearby school.
But I would only recommend starting school after you guys have done some work and cleaned up your finances. You’ve got a bunch of debt hanging over your heads, and the truck you mentioned is a big part of the problem.
Sell the truck and move down to something very inexpensive to drive for a little while. Then tear into the remainder of the debt and get it paid off as fast as you can. After that, save up a bunch of money so you can go to school debt-free.
I know that may seem like a long time before you can start school, but chances are you can get this done in less than two years. And trust me, going to school debt-free will feel a whole lot better than having another bunch of payments buzzing around your heads for years to come!
—Dave
* Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com
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Dear Dave,
My mother-in-law is in poor health and doesn’t have a lot of money. She has been giving us a lot of her earnings over the last couple of years as a kind of early inheritance, because she’s afraid she’ll spend it all. We’re setting it aside in a savings account in case she needs it, but I still feel strange about the situation. What do you recommend we do?
Andrew
Dear Andrew,
This is an odd scenario. It’s like taking donations from poor people because they refuse to address their own issues.
My recommendation is pretty simple. She needs to learn how to properly handle her own money. Obviously, it wouldn’t be a good idea for you to say that to your mother-in-law, so your wife should be the one who attempts to lovingly and carefully deliver the message. The conversation still may not be pleasant, but there’s a better chance she’ll listen to a daughter than to you.
I appreciate the fact that you and your wife aren’t being greedy or opportunistic about this situation. Setting the money aside and earmarking it for your mother-in-law later on is an honorable thing. If your wife can’t convince her mom to start taking care of her own finances, at least you can protect her from herself.
You’d still be treating the symptom instead of the problem, but if she won’t listen it may be the best you can do.
—Dave
(Wedding bells times three!)
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Dear Dave,
We have three daughters under the age of 5, so we may be spending quite a bit on things like weddings in the years to come. Is there a Baby Step for weddings? If not, during which Baby Step do you recommend setting aside money for this?
Carrie
Dear Carrie,
I don’t have a Baby Step for weddings, but in my mind it would come after Baby Step 5, which is putting aside a college fund for your children. Once you have education savings, retirement and extra house payments underway, then you could start putting aside a little extra for weddings.
This may not make me popular with some young ladies or their moms, but an education is more important than a wedding. Maybe this is the dad in me coming out, but if I had to choose between paying for college educations and paying for big weddings, I’m going to pay for school. In my mind, anyone who disagrees with that is kind of a twit.
Weddings are wonderful, and you should mark these kinds of milestones with celebration. But a wedding is only a one-day event. Plus, there’s absolutely no statistical correlation between the size and expense of the wedding and the success of the marriage!
—Dave
* Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.
