Help? Not yet

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

My daughter is in her late twenties, and she has a good job making $50,000 a year. The other day, she told me she has $15,000 in credit card debt and has financed an expensive car she's upside down on. Her apartment in Omaha costs $600 a month, and she is asking for help to get out of the hole. We tried to teach her how to handle money, but apparently it didn't work. How do you think I should handle this situation?

Cindy

Dear Cindy,

Here's what I would tell her if she were my kid in that situation. First, I'm not paying for your problem to go away. I'd tell her to sell the car and get a cheap little beater. She'll have to get a small loan to cover the difference, but it will rid her of a car payment. And hey, a little bit of debt is better than a whole lot of debt — especially when the debt is on something that's going down in value. After that, she can get a part-time job and work her tail off until she cleans up the mess she made.

I know all this sounds harsh, but this girl had a good thing going and she screwed it up by being impulsive and immature. Think about it; she's making $50,000 a year, and only $7,200 of that was going toward rent. Her taxes aren't that much, so where's the rest of the money going? I'm guessing a big chunk is being wasted on restaurants, goofing off and other stuff she doesn't really need.

Let her wallow in it and worry about things for while first, though. Then, if she's willing to accept responsibility for her actions, and she starts working hard toward handling her money wisely, you might help her out once in a while. Every time she pays off $1,000, you could add $500 to the next payment. But I'd test her resolve first to see if she wants it badly enough!

Dave

The money's ahead of you

Dear Dave,

I'm 64, and I've been dating a 73-year-old man for four years. We're talking about marriage, and we've been discussing finances. He's retired, but I still work part-time even though I'm in pretty good shape financially. His plan, if we get married, is to give his house and his savings to his children, while we live in my home. We'd still have his small pension, what I bring home and my savings, but I think he should invest at least half of what he has in our marriage and relationship. What do you think?

Betty

Dear Betty,

So, his wealth goes to his kids and you get to feed and take care of him until he dies? In my mind, this is not a good plan.

I think what you're discovering here is that this guy just doesn't want to be lonely. It sounds, too, like he's dipping into your wealth while all his stuff goes to his kids. I'd be a little frustrated with this idea if I were you. And I think the two of you need some premarital and relationship counseling before you take another step forward. Right now, you're in third place behind his kids and his belongings.

I'm not saying he has to give everything to you, but you guys definitely need to have a serious talk and find a little balance. Right now, he's clinging to everything in one way or another, and not really offering to take care of you. In my mind, you need to be ready to take a bullet for someone when you want to marry them. And this guy hasn't shown that he's ready to put you first.

—Dave

The Problem With Being Impulsive

Written by Dave Ramsey on . Posted in Finance

Dear Dave,

davernewI have a problem with impulse spending. I switched to a debit card so that the money comes straight out of my checking account, but I still buy things I know I shouldn't. Should I stop using the card?

Lauren

Dear Lauren,

Debit cards are great. 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 carefully and give a name to every single penny of your income. Otherwise, you can still overspend.

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 have to get mad at the things that steal your money a dollar or two at a time, and you have to put your foot down.

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.

Trust me, Lauren. The greater good is worth the sacrifice. But until you make that decision for yourself, you won't do it.

Dave

Doing without

Dear Dave,

In your mind, what's the biggest thing a family can live without when it comes to getting control of your money and living on a budget?

Will

Dear Will,

On a regular, day-to-day basis, I think maybe the biggest and best thing you can eliminate is eating out. There are always the shiny things people can do without. Sometimes people sell a fancy car or boat, and get rid of a $600-a-month payment right off the bat. But it's really not a good idea to be eating out when you're broke. It really adds up.

I love a good restaurant, and I've got nothing against the industry. The problem, though, is that lots of people are struggling to pay their bills or set aside something for retirement because they're eating out all the time. Most folks simply don't realize how much money they throw away by heading to the drive-through for lunch or going out to dinner "once in a while."

I want people to enjoy life, and a great part of that can be going out and having a meal with your family and friends. But if you're experiencing financial issues, the only time you should see the inside of a restaurant is if you're working there!

Dave

What Does it Mean?

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

I bought a piece of lake property not long ago, and the developer has first right of refusal if we decide to sell it. We originally looked at the property as an investment or building site, but I really don't understand what first right of refusal means.

Craig

Dear Craig,

A lot depends on the wording, but typically it means that you can sell property to another buyer subject to the developer not wanting to buy it back at that price.

If you decided to sell within the timeframe specified in the first right of refusal contract you'd have to notify the developer you have a written offer on the property. Then, you have to give him a chance to buy the lot first at that price.

Or, you could just ask the developer — in writing — to waive his first right of refusal if this is something you want to do. They're in the business of selling lots, not buying them, so it may be an easy deal.

Dave

Different brokers, too?

Dear Dave,

Is it a good idea not only to diversify among various mutual funds, but also among different companies that sell mutual funds?

Brian

Dear Brian,

There's no need to do that. Find one good broker you're comfortable with and who has the heart of a teacher. You want to know what's going on with your money, and finding someone who can explain it well and help you understand the details is a must.

Just make sure your broker is not directly connected to the mutual fund. You don't want someone with a vested interest. What you're looking for here is a person who can objectively connect you to a good mutual fund, with a solid track record of at least five to 10 years.

Dave

Investment or debt?

Dear Dave,

I'd like to send my kids to a private Christian school, and they would begin classes the same month we'll finally be out of debt. We would have to pay this out over the course of the school year, so would you consider this to be an investment or more debt?

Ed

Dear Ed,

I don't borrow money whether it's an investment or not. But lots of private schools have tuition plans where you don't have to borrow money, and you just make two or three payments during the academic year.

I don't know if I would really call that a debt, because you can always take the child out of the school if you see you can't make the payment. Just make sure you carefully look over any contract involved and know what you're getting into before you sign up for the ride.

You don't want to obligate yourself to money you don't have, especially when you've worked so hard to get out of debt. Just save up, and have a place in your budget for tuition.

Dave

Serious about getting out of debt?

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

Should you budget for mad money, or just carrying around cash, when you’re trying to get out of debt?

Aurora

Dear Aurora,

What really matters is the amount of mad money you allow yourself to have. Everyone needs a little pocket money. It’s probably not going to throw you off too much if you put $10 or $20 in there. But $100 or $200? That’s a bit much when you’re scrimping, saving and supposedly working hard to get out of debt.

Think of it as a safety valve, Aurora. Everyone needs a break and a little fun now and then. Whether it’s grabbing lunch out, or going to a movie once in a while, you need to relax and let off little steam.

Just make it part of your regular monthly budget, and stick to the amount. Little things like this will help keep your total money makeover moving in the right direction without wearing you out!

Dave

It's a better idea to pre-plan

Dear Dave,

My wife passed away last year, and she was just 43-years old. I paid cash for the funeral and all the arrangements. Now, I’m getting solicitations from the funeral home, wanting me to prepay my own funeral. I’m 45-years-old. Is this a good idea?

Dave

Dear Dave,

God bless you and your family. I’m so sorry you have to go through this, but I’m glad to hear you were in good enough shape financially to handle the burden. That means you were both very wise with your money.

My advice is to pre-plan, but don’t prepay. As you discovered, having to make important decisions in the midst of that kind of grief is a hard thing to do. Sometimes, people are so emotional during times like these that they make bad decisions. So, pre-planning and making selections ahead of time is a great idea.

But it’s never a good idea to prepay for this kind of thing, and here’s why. If you live to an average age, for what you’d prepay today at age 45, you could invest the amount, be self-insured for that kind of thing, and in all likelihood have a ton of money sitting there when your time comes.

Events like this make you realize the need for proper planning, but don’t ever prepay them. Lots of people in the funeral industry don’t like me for this stance, but that’s just because they make lots of money on prepayment plans.

Dave

That's Why You Have Health Insurance

Written by Dave Ramsey on . Posted in Finance

dave-small-ramseyDear Dave,

Do you think having cancer insurance is a good idea?


Brittany

Dear Brittany,

No, I don't believe buying cancer insurance is a good idea. However, I do believe everyone needs health insurance. If you have a good health policy in place, it's going to cover you in the event you're diagnosed with cancer.

Lots of insurance companies offer these policies because cancer is such a scary thing. It's a hot-button topic, and many people have lost friends and relatives to cancer. I don't believe in cancer policies though. You need a good emergency fund of three to six months of expenses, long-term disability coverage and a solid health insurance plan.

My favorite health plan, and what I use personally, is the Health Savings Account (HSA). With an HSA you have money sitting there to cover some of the ancillary things. Most cancer policies won't cover alternative treatments and things like that, and lots of them are income policies, meaning they replace a portion of your income, but that's what disability insurance is for.

—Dave

Impulsive may equal homeless

Dear Dave,

I moved to New Orleans four years ago for a job. I was let go and found a government job pretty quickly, but I'm ready for a change of pace. I'm thinking about using my two weeks of vacation to move and find something different in Austin, Texas. I have a little cash saved, but how much savings should I have in place for something like this?

Montgomery

Dear Montgomery,

What you're describing may have sounded fun and cool to me when I was 20. But I made lots of really dumb mistakes back then, and it's definitely not the way I would handle things now.

Austin is a fantastic city. It's booming, the people are great and it's only about a day's drive from New Orleans. But going over there cold turkey with nothing but a little money in your pocket isn't a good idea. In other words, I'm not going to give you permission to be impulsive and unwise.

If I were you, I'd take those two weeks of vacation, go to Austin, and see if I could line up a job. In addition to that, use every waking moment you're not at work to scour job listings in and around Austin. Even if it's an interim kind of thing or two part-time jobs, at least then you wouldn't have to burn through all of your cash. Montgomery, this is the very same advice I'd give my own son if he called me in this situation.

I love that you're taking charge of your life and looking to make things happen. Just make sure you use a little wisdom and some planning in the process. Never jump off the dock before the ship has arrived!

—Dave

* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 5 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Where's the Safety Factor?

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

I'm retired, and currently I have about five percent of my retirement savings in gold and silver I've been acquiring over the last few years. I've seen gold prices decline significantly, and I'm wondering if I should hang on to it as a safety factor in the event the economy goes bad in a hurry. I want to make sure I'll still have a safety factor, and something of value, if that happens.
Steve

Dear Steve,

What's the safety factor here? And if everything goes downhill, why does it have value? 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!

—Dave

On the road again?

Dear Dave,

We've got our emergency fund in place, and we're debt-free except for our home. We'd like to have a child soon, but my job requires frequent travel. I don't want to be away most of the time when there's a baby in the house, so I'm thinking about opening my own business. That way, I can set my own hours. What do you think of this idea?

Ray

Dear Ray,

Ask yourself this question: If time and money weren't considerations, which one would you rather do? You'd be on straight commission as an entrepreneur, so there would be no regular checks to count on as income. You'd have to wake up every single morning, go out and kill something and drag it home. If you don't, your family won't eat.

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.

Do lots of research and planning before you make any big changes, Ray. There are great small business ideas still waiting to be had, but to make something good happen you've got to find the one that's right for you!

 Dave

Do the right thing, but don't let them bully you

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

I have a student loan in default that is now being handled by a collections agency. They want me to pay the entire $20,000 now, or consolidate it with $16,000 in collection fees added. Are these my only options?

Rebecca


Dear Rebecca,

There’s no way I’d consolidate and pay $16,000 in collection fees. Right now, they’re trying to bully you. They may eventually garnish your paychecks, but I think you can still work out something with these guys.

You’ll have to repay the loan, and probably the interest and some of the late charges, but $16,000 is a bunch of crap. Don’t run out and get another loan to pay it, but don’t let yourself be blackmailed, either. You’ve made a mess by ignoring this for so long, so now you’ll have to save every penny you can and start sending them substantial amounts of money each month.

Trust me, they’ll take your payments and cash the checks. Hopefully, you can settle on a reasonable repayment structure and have this thing killed off in a couple of years.

Dave

Dear Dave,

I’m debt-free except for my home, and I’ll have that paid off in about 12 months. I currently make $60,000 a year and live in an area of Florida that is designated a flood plain, because a river that empties into Tampa Bay runs behind my home. Currently, I’m paying $1,070 a month for flood insurance. My house is worth $325,000, and water has only come up into the yard twice in over 20 years. Since I’m doing pretty well financially, do you think I need to keep my flood insurance policy?

Trudy


Dear Trudy,

From what you’ve told me about the history of your property, it sounds like your biggest concern might be if a hurricane caused a backwash in your area. Insurance is already pretty tough in Florida when it comes to those kinds of things, but you don’t want to run the risk of your house getting mowed down and losing everything.

If I were in your shoes, I think I’d like the protection of flood insurance. What you’re paying for the policy is such a small percentage of your world, compared to the value of your home and your income. Keep the coverage, Trudy!

Dave

Umbrella Policy?

Written by Dave Ramsey on . Posted in Finance

Dear Dave,

davernewMy son is in his thirties and has been married for seven years to a girl from a wealthy family. Her parents provided them with a lot of financial support over the years, but now they're getting divorced and he has come to us for the money to make this happen. On top of all this, when we ask him why he doesn't have the money he tells us it's none of our business. We don't like his attitude, but we're not sure what to do.

Dee

Dear Dee,

This is a grown man we're talking about, and if he's going to take on the lifestyle and actions of a grown-up he needs to act like one and take care of his responsibilities. I understand he's your son, and he's hurting right now. Still, it takes a ton of arrogance to beg money from someone and tell them the reason they don't have it is not their business.

If he seriously wants to get into some financial counseling and start becoming accountable for his money — to himself and to you — then you might consider helping him out financially. But at this point, you're giving a drunk a drink if you just hand him money because he wants it.

Anyone can make a mistake, Dee. But it's not your job to fund his irresponsible behavior or his arrogance!

Dave

Dear Dave,

I follow you on Twitter, and I was wondering if you recommend buying an umbrella policy. If so, how much?

Dean

Dear Dean,

If you've started to win with money and build some wealth, an umbrella policy is some of the cheapest insurance you can buy. It's just about the biggest bang for your buck.

Here's an example. In most states, you can get an extra $1 million in liability coverage added to your car insurance and homeowners insurance as an umbrella policy for as little as $200 a year.

There's no problem if you don't have any money. But if you've got some cash, and you bump into somebody, it's a really good thing to have that extra umbrella insurance policy in liability situations!

Dave

Making changes

Written by Dave Ramsey on . Posted in Finance

Dear Dave,

davernewMy mom and dad always told me to live below my means, but they never showed me how to make it happen. I’ve gotten out of debt and fallen back in several times. I want to get control of my money and stop busting my budget. How do I keep from falling back again?

Sandi

Dear Sandi,

It sounds like you’ve taken a serious look at your situation, and you’re smart enough to know it’s not working and you want to do things differently. Well, this is a great time of the year for changes!

Years ago when I crashed and burned financially there were a few strong emotions that spurred me towards change. One of those was disgust. I realized that what I was doing was stupid, and that I was tired of living that way. I made a conscious, proactive decision that things were going to be different.

The second emotion was fear. I was scared to death that I’d be broke for the rest of my life. I don’t think you should ever live your life in fear, but a reasonable, healthy level of fear can be a terrific motivator.

The third thing was contentment. Marketers try to sell us on the idea that we’ll be happier if we just go out and buy things. When we have this stuff crammed down our throats all day long, rapid-fire, it can affect our level and perception of contentment.

One of the practical things I did was to stop going places where I was tempted to spend money. When you have to go out, make a list of only the things you need and take just enough cash with you to make the purchase. Spending money on a bunch of stuff you don’t need, and probably don’t really want, isn’t going to bring you contentment.

Dave

Who's the boss?

Dear Dave,

I’m trying to get out of debt, but it seems like something unexpected always happens to knock me back down. I’m single, make $45,000 a year, and I have $12,000 in debt, in addition to a mortgage payment of $1,124 a month. I’ve been trying to live on a budget, but I still don’t know where all the money goes.

Anonymous

Dear Anonymous,

For starters, your house payment is kind of heavy. I always recommend that your monthly mortgage payment be no more than 25 percent of your take-home pay. Still, the biggest thing is that you’ve got to get control of your money instead of letting it control you.

I want you to sit down every month, before the next month begins, and write it all down on paper, on purpose. Give every single dollar a name, and tell your money what to do. Once you’ve done this, the idea of “trying to live on a budget” stops being some vague idea floating around out there and becomes a real game plan for your money!

Dave

The wrong half of the month

Written by Dave Ramsey on . Posted in Finance

davernewDear 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

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

Trying to Help a Friend

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

I have a friend who is experiencing financial problems. She is between real jobs at the moment and only bringing in about $600 a month. But even when she's working regularly, she doesn't budget or manage her money wisely, and she's always looking for more money. On top of all this, she's holding out hope for her dream job out of state. She interviewed several months ago, and hasn't heard anything from the company. What can I do to help her?
Gina

Dear Gina,

I don't mean this as an insult so much as an observation, but your friend sounds kind of flighty and impulsive to me. I think she may also be a bit immature. So what we're really talking about here is how to get your friend to grow up a little bit and stop chasing rainbows. Don't get me wrong. There's absolutely nothing wrong with having a dream job, but you have to be realistic and practical at the same time.

Right now, I want her chasing three or four smaller job rainbows at once so she'll actually have a chance of catching something. When you chase just one, in most cases you end up with nothing. The first thing I'd tell her is that the most employable people are ones who aren't broke. When you go into an interview and you're broke, you come off as tense and desperate, and you don't make a very good job candidate.

The answer to that, when you're basically unemployed, is to work any job – and any three or four jobs. Wait tables, deliver pizzas or mow yards. I don't care what, just generate some income. Work all the time and smile! You never know when you might be talking to your next employer. You could be walking someone's dog one day and end up in their marketing department the next. But none of this will happen if you're trying to feel better about yourself by sitting home watching Oprah reruns.

I assume that since you're friends, she's willing to listen to what you have to say. But if she won't, all you can do is pray for her. Remember the old saying, "Those convinced against their will are of the same opinion still."
—Dave

Honeymoon on a budget

Dear Dave,
I just got married, and my husband and I want to book a combination honeymoon and New Year's trip to celebrate. We don't have all the money for it right now, but will have in a few weeks. We were thinking about booking the trip on a zero-interest credit card, and paying it off when we have all the money. I know you hate debt, but would this be okay since it would be a very short-term debt?
Laura

Dear Laura,
I know you guys are excited and happy about being married. And I wish you all the happiness in the world. But I don't recommend credit cards of any kind, for any reason, whatsoever.

I don't want to burst your bubble, but if you can't pay for this trip up front you can't afford it. Believe it or not, lots of people postpone wedding trips until they've had a chance to save up a little bit of money. Some folks have never even gone on a honeymoon trip, and they have great, loving marriages.

My advice to you and your new husband is to work, and save up a little bit more. Maybe one or both of you could pick up extra jobs for a little while, and make it happen sooner. Then, when you can pay cash for the trip, go have a blast on a honeymoon you can afford!
—Dave

An Unlikely Thief

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

I gave my wife $350 for Christmas shopping at Wal-Mart. While she was there with our six-year-old daughter, she cashed her bonus check to put with the Christmas money. When she tried to check out, the money was gone. My wife even asked our daughter if she took the money out of mommy’s purse, and she said no. Later, we found the money in our daughter’s coat, and she didn’t seem sorry at all for having taken it. How should we address this?
Jonathan

Dear Jonathan,
Most children that age really have no idea something like this is such a big deal. But this is more than just a money thing. It’s something of great value, and it’s someone else’s stuff. Not only that, but she took it, lied about it and then showed no remorse. I’ve got a really short fuse when it comes to lying, but the lack of repentance and sorrow associated with something like this are my biggest problems.

First of all, you and your wife have to present a united front when you talk about this with your child. This is an incredible example of a teachable moment, but you two have to be on the same side and treat it with appropriate seriousness. You have to make your daughter understand that what she did was wrong and why it was wrong. Perhaps you could also use an example of someone taking something from her — something that was very valuable to her — and ask how she would feel in that situation.

Lots of times this approach, especially with little kids, will touch their hearts and help them realize the magnitude of their actions. In a case like this, I think I’d hand out very little in the way of punishment. Regardless, you have to nip this kind of thing in the bud immediately. This is the kind of violation you cannot allow to happen unaddressed. And whatever the consequences of her actions end up being, you must make sure she clearly understands why she’s being punished and why what she did was wrong.
—Dave

You need an umbrella!

Dear Dave,
My husband and I both lost our jobs over a month ago. I’ve been interviewing, and he started a two-week training program for a new job the other day, but right now we’re in survival mode. We just cashed in an annuity, and were wondering if we should pay down debt and reduce the money going out each month, or just live on it?
Veronica

Dear Veronica,
Right now, it’s raining and you need an umbrella. If it were me, I’d just sit on the money for the time being.

Don’t misunderstand me. You need to be honorable and pay your debts, but you may have to put that on hold for a while. Right now, it’s more important to have food in the house and keep the heat on. This kind of situation is scary and can be really stressful, so make sure you hug and hold on to each other a lot, too.

It’s been rough for you guys, especially right here during the holidays. But it sounds like things may be taking a turn for the better. Your husband is about to start making money again, and you may have some possibilities on the horizon.

Through this stretch, honest communication can make a huge difference. Make sure your creditors know what’s happening. Let them know that you want to make things right, and that you will make things right as soon as you can.

God bless you guys!
—Dave

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