Wife Wins

Written by Dave Ramsey on . Posted in Finance

davernewDear Dave,

We just started following your plan, and we have $39,000 in debt. We make $55,000 a year, and two of our smaller debts — one car and a credit card — are both $7,500. The credit card has a higher interest rate, so my wife thinks we should pay it off first. I look at the car as a necessity, and for that reason I think we should pay it off first. Who's right?

Pat

Dear Pat,

When the rules of paying off debts from smallest to largest don't apply, I look at things this way: If you have two debts that are of equal amounts, I would attack the one with the larger interest rate first. In your case, that would be the credit card debt.

I get what you're saying about the car. You guys might be in a bind if something happened and you lost one car. But it's also something you could work around if you had no other choice. So yeah, knock out the credit card first then move on to the car. Going this route will serve two purposes: First, it will save you some money. And second, I've got a feeling it will fire up your wife and get her on board with the plan even more than she already is.

She's taking this seriously if she's eyeballing interest rates, Pat. So use this momentum to work together, and knock out that debt!

Dave

IRA to gold? Bad idea

Dear Dave,

What are your thoughts on transferring an IRA over to gold?

Sandy

Dear Sandy,

Honestly, I think that's about the dumbest thing a person could do. I hope I wasn't unclear.

Gold is going down like a rock right now as people start to believe in the economy and the economic direction of this country again. The stock market indicates this is true, and in the process, gold becomes worth less and less. Gold is essentially a fear-based product, and the less fear that's out there, the cheaper gold is.

That's not how you want to fund your IRA, Sandy. You want to fund it with something that has a long track record based on growth due to the performance of the companies involved — not someone's greed or fear. Gold is a horrible investment, and I don't own any except for one nice watch and a pair of cufflinks. That's it!

Dave
Author Information
Dave Ramsey
About:
David L. "Dave" Ramsey III (born September 3, 1960) is an American financial author, radio host, television personality, and motivational speaker. His show and writings strongly focus on encouraging people to get out of debt.

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