(the free dinner that wasn’t!)

Dear Dave,
How do you feel about the free trips and dinners timeshare communities offer as part of their sales pitches? Isn’t it a little like playing with fire?
Diane

Dear Diane,
You’re close. I think it’s more like playing with fire while you’re sitting in a puddle of gasoline!
Listen, there’s nothing good about a timeshare. They have no redeeming qualities whatsoever. Besides, in most of these deals the food is bad and they’ll stick you in a room that’s not so hot, either. Timeshares are one of the few consumer products that have a 97 percent dissatisfaction rate. It’s virtually impossible to find someone who’s glad they bought in to one of these things!
I know people play games with this scenario. They think they’ll get lots of free stuff by just sitting through a sales pitch and then saying no. But why in the world would you want to waste vacation time or even one weekend of your life letting some salesperson twist your arm?
Plus, you’ve got the added problem that most folks aren’t as tough a sell as they think they are. If you’re not careful, you’ll end up agreeing with the guy on a couple of silly things, zoning out while the presentation wears on, and next thing you know, you’re driving away as a timeshare owner!
Don’t take a chance on getting stuck with one of those things, Diane. It’s a dumb idea!
—Dave

(car leasing is 100 percent stupid!)

Dear Dave,
Do you have any advice on vehicle leasing for business purposes? I’ve heard that the expense is 100 percent deductible.
Anonymous

Dear Anonymous,
Yeah, and it’s 100 percent stupid, too! “Fleecing” is absolutely the most expensive way to operate a vehicle. What you’re talking about is rationalizing the fact that you want a vehicle you can’t afford. It’s a bad idea.
Dr. Tom Stanley interviewed tons of millionaires while he was writing his book, “Stop Acting Rich.” In the process, he found out that 80 percent of them had never leased a vehicle. What does that tell you? It tells me if you want to be rich, you need to do what rich people do—and they don’t lease their vehicles! Plus, I really don’t care if it’s 100 percent deductible. Guess what? I get deductions on the vehicles owned by my company. It’s called straight-line depreciation.
Never lease a vehicle for business purposes. If you don’t have the cash to pay for it outright, then you can’t afford the thing. It’s just that simple!
—Dave

(can stay-at-home moms be insured?)

Dear Dave,
Do stay-at-home moms need disability insurance?
Sarah

Dear Sarah,
Yes, they do. Unfortunately, they can’t get it right now. Under current law, you must have an earned income in order to receive disability insurance.
Now, it’s possible to get disability insurance if you have a business at home. In that case, you’d need to show two years worth of tax returns to prove that your self-employment was actually generating an earned income.
My wife’s been a full-time mom for 25 years, and I know how hard she works and how much she does every day. Believe me, if she could get disability insurance, we’d buy it in a second!
—Dave

(forget mortgage accelerator plans)

Dear Dave,
How do you feel about mortgage accelerator plans? Can you please explain them?
Doug

Dear Doug,
Basically, there are two types of mortgage accelerator plans floating around out there. First, there’s the old bi-weekly mortgage where you make half of a payment every two weeks. This will drop the length of time you’ll pay on a 30-year mortgage down to about 22 years. Most companies will charge a fee to service these programs, but I think that’s ridiculous. There’s no way I’d pay someone to do this for me.
Think about it. There are 26 two-week periods in a year, and 26 half payments equals 13 whole payments. So, you’re making an extra payment each year. That’s why your mortgage gets paid off early. You can accomplish the same thing by writing a check for the principal only once a year. If you want to get really detailed, you can do the same thing each month by writing a check for one-twelfth of a payment.
The other kind of mortgage accelerator plan out there is a total rip-off. I’m talking about one where some companies will try to sell you a $3,500-piece of software tied in with a home equity line of credit, or HELOC. These things are often called money merge accounts. In this situation, you pay your bills out of the HELOC, and your paychecks are deposited against the HELOC. Then, they’ll apply whatever’s left against your mortgage, and it “magically” pays off your mortgage faster.
The problem is that no matter how many times you move the shell, the pea is still underneath. Whether you use a HELOC or just a yellow pad to make a budget, if you want to make extra principal payments on your first mortgage, you have to live on less than you make. And there’s no way I’m paying some rip-off company $3,500 for the privilege. Talk about stupid! You can do that on your own by making a decision to sit down every month with a pen and a piece of paper and write out your own monthly budget.
Now you know why I’m not a big fan of mortgage accelerator plans you have to buy. Here’s the truth, Doug. There’s no easy, magical formula when it comes to getting out of debt. It takes a lot of hard work and discipline. You can accelerate your own early mortgage payoff by living on less than you make and learning to control the person you see in the mirror every day!
—Dave

(leave something in the account!)

Dear Dave,
If I understand your budget plan, we’re supposed to allocate every dollar toward something. If we did that, it would leave our account balance at zero. What do you do if your bank requires you to maintain a minimum balance in your account and charges you a service fee if you don’t?
Kristina

Dear Kristina,
I think you misunderstood my plan. When doing a monthly budget, you should allocate every single dollar of monthly income, not every dollar in your account.
Your monthly budget should be based on income minus outgo. You always want to have a balance of some kind in your accounts. Otherwise, you’ll end up paying a visit to the land of bounced checks, kiddo. And that’s not fun for anyone except the bank, because they’ll charge you for the trip!
—Dave

(how do I get started in real estate?)

Dear Dave,
I’ve always been interested in real estate, but the only experience I have has come through owning my own home here in Atlanta. I’m not sure I’m enough of a handyman to fix up houses to sell, but I’ve never thought of myself as a landlord, either. What advice can you give me?  
Mark

Dear Mark,
Anytime you own real estate you’re going to have to deal with repairs, whether it’s fixing up a house to sell, a rental property or your own home. If you’re not the handyman type, then you’ll need to know some repairmen and have other connections in the building industry. I mean, if the house needs extensive work, or the central unit or water heater goes out, it’s your job to make things right!
There are a few things you can count on when it comes to rental properties. We just talked about repairs, and that’s a big one. Another one is a formula that goes something like this: on average, the cheaper the rent, the bigger the “character” you’ll have to deal with as a renter. Now, if you run too high on the rent, you’ll discover a different type of character. This type thinks you work for them, and it’s never good to have confusion on this issue.
A good, solid, middle-of-the-road house in your area would probably cost about $150,000 to $200,000. A lot of people will tell you to take on debt to buy the place, but I want you to pay cash on this trip. It may mean a less expensive house and dealing with low-income renters to start with, and that can be a headache. The good thing is that you’d learn how to be a landlord from the bottom up. You’ll learn how to be firm, but fair, and how to be gentle in the midst of a crisis. Believe me, you’ll have a crisis or two—or 10 or 12—if you stay in the landlord business very long! You’ll also learn how to handle evictions. But once you get some experience under your belt, you won’t be intimidated by other, bigger, rental situations in the future.
So, either you’ll be a landlord, or you’ll be a person who buys and flips properties. Either way, make sure you do it with cash. Don’t go into debt to make this happen!
—Dave 

(triple play investing)

Dear Dave,
I’m employed, and I’ve maxed out my Roth IRA. I also have a small business on the side, so can I do a SEP as well?
Bill

Dear Bill,
Sure you can! If you want, you can do a SEP (Self Employed Pension plan) along with a Roth IRA and a 401(k). There’s no limitation to how many of these things you can have working for you.
The only limitations you’re looking at would be in terms of income. If your annual household income is more than $154,000, and you’re married, filing jointly, you’re going to run into issues with a Roth IRA. When it comes to a SEP, you have to provide it for any full-time employees who have been with you for three of the last five years at the same percentage of their income.
Good question, Bill!
—Dave

(breaking down the legacy drawer)

Dear Dave,
I’ve heard you talk about something you call The Legacy Drawer. What exactly is this, and what goes into it?
Lisa
Dear Lisa,
One of the best ways I know to tell your family how much you love them is by having your financial act together and organized in a central location. The Legacy Drawer is a collection of your essential financial documents in a safe place where they can find them when you die, or if you’re sick or disabled.
All of the pieces of your financial life should be in this drawer. I’m talking about your will, living will, estate plan, investment statements, insurance policies, and property deeds. You should also include stuff like power of attorney statements, access information to lock boxes, and other instructions to family and loved ones.
Make sure it’s really well-organized, too. It should be laid out simply enough that anyone who can read could open it up and find exactly what’s needed in just a few minutes. The stress of having a loved one die or become seriously ill is bad enough. You don’t want to make it any harder on them by leaving your finances in a mess!
- Dave

(how much income do I put toward buying land?)

Dear Dave,
My wife and I make about $85,000 a year. We’re debt-free, and we have no kids. We’d like to start saving money to buy some land in the near future. What percentage of our savings should we put toward this?
Dennis

Dear Dennis,
I don’t know if there’s necessarily a specific percentage for this kind of thing. Since you guys are already debt-free you need to make sure that you’ve got a fully-funded emergency fund of three to six months of expenses in place, along with retirement funding. In your case, anything else you have sitting around after that is simply wealth.
If you’ve got $50,000 sitting in a savings account in addition to these things, and you’d rather have $50,000 worth of dirt instead of a bank account, I’m cool with that. It’s really more a matter of ratios than percentages. Now, all this might change if you make $15,000 a year instead of $85,000 a year. I’m not going to put retirement on hold for 10 years to save up to buy dirt, either.
There needs to be a sensible balance, and you’ve got to make sure you have the important things covered first!
- Dave

(Balancing ambition and contentment)

Dear Dave,
How do you balance ambition with contentment?
Fran

Dear Fran,
This is a really good question! To be honest, I don’t believe they require balance. You thought ambition was the opposite of contentment, didn’t you? I don’t look at it that way. It’s not like a teeter-totter. They don’t have to balance out, because they’re not on the same spectrum.
I’m content and ambitious. I’m content with what we have and what God has entrusted to us. On the other hand, I’m not content to sit around and do nothing just because we’ve been blessed. To me, that kind of attitude is not contentment, it’s apathy. I do what I do because I’m passionate about helping people. You can have peace and contentment and at the same time be a real go-getter—the kind of person who still moves stuff around and makes things happen. They’re not inconsistent concepts. I think problems are created when ambitious people are driven by a lack of contentment.
Let me ask you this: Do you think Jesus was content? Do you think He was ambitious? The answer to both questions is yes! You’d have to be pretty ambitious, I think, to take on the sins of the world. At the same time, do you know of anyone else who had more contentment than He did?
More than anything, I think it has to do with what’s driving your ambition. If discontentment or a quest for “stuff” is the motivating factor, then maybe they are on the same spectrum. But I think that’s a really bad way to live your life. You can get tons and tons of stuff, but no matter what you get or how much you get, you’re still not going to really be happy until you find contentment!
—Dave

(Debt freedom more important than marriage?)

Dear Dave,
When does reaching the point of being debt-free become more important than marriage? We’re following your plan and doing the debt snowball, but my husband’s been working a second job, and it’s really cutting into our together-time at night and straining our relationship. I’m afraid we’re going to end up debt-free, but divorced. When does one outweigh the other?
Tracy

Dear Tracy,
When does one outweigh the other? Maybe when you stop whining?
Seriously, getting out of debt is never more important than your marriage. But families go through all kinds of stuff, and one of those things is cleaning up messes they’ve made. It’s not always fun, but there’s a price to pay if you want to win with your money or anything else.
It sounds to me like your husband has gone gazelle intense about getting out of debt, and in the process may have left you behind a little bit. I don’t recommend that! He probably needs to take some time to come back and emotionally re-connect with you. And I’m sure some good, old-fashioned back rubs and words of encouragement from you are in order. Your man could use them if he’s been working two jobs!
But there’s plenty of time for snuggling and stuff later. Right now, you’re trying to do something—something really important—for the good of your family. I know it can be difficult, but it won’t last forever. And I can promise you this: Once you’re done, you’ll be very glad you toughed it out!
—Dave

(Prioritizing saving as an adult)

Dear Dave,
I’m 20 years old, and I’m working my way through college. I’ve never been in debt, and I’ve already got a good emergency fund in place. But it seems like there are so many things to plan for down the road. How do you prioritize and manage saving for a better car, investing, marriage, kids and everything else in life? It all seems so overwhelming.
Eric

Dear Eric,
You’ve done a great job so far! I’m glad you’re looking toward the future, too. You’re right, it can be overwhelming if you look at all these things as if they have to be accomplished today. But here’s the good news: You don’t have to do everything right now. It’s great to have a plan, but you’re just 20 years old. You’ve got plenty of time to decide what’s important to you and plan accordingly.
All the things you mentioned are great goals. But, in my mind, finishing college is your number one priority right now. Then, let’s look at the other stuff. If you have a girl you’re crazy about, marriage may be next on the list. If your car is about to roll over and die, the next step may be a better vehicle.
Don’t be too intimidated, Eric. Things are often easier to deal with when you break them down into smaller components and address them individually. Nobody can do four or five things at once, and do them all to the best of their ability. Just decide what matters most, put it at the top, and list everything else in descending order of importance. Then just go down the list, and knock them out one after the other.
That’s how you eat an elephant, Eric. One bite at a time!
- Dave

(Using the emergency fund)

Dear Dave,
My husband and I are debt-free, and we’ve got a fully funded, six-month emergency fund in place. The problem is that he lost his job last month. I’m still working part-time and bringing home $150 a week. But we’re unsure if we should cut our budget down to bare bones or continue living like normal since we have so much saved?
Jennifer

Dear Jennifer,
You definitely want to live on as little as you can. This way, the money in your emergency fund will last longer. You may be bringing in $600 a month—and that’s okay for a part-time job—but it’s not nearly enough to run a household.
It’s beans and rice time, girl. This means no vacations, no movies, no restaurants, and no $100 sneakers for the kids. In other words, no life until he finds another job and you guys are on your financial feet again. Keep the lights on and food in the pantry. Those are your priorities right now. I’d rather see you go into crunch time now without completely draining your emergency fund before he goes back to work.
This is the living, breathing definition of an emergency, Jennifer. Praise God you guys were smart enough to plan ahead. So yes, use it; but be wise. Spend only when it’s absolutely necessary!
- Dave

(Do I need pre-paid legal?)

Dear Dave,
Do you have an opinion on whether or not pre-paid legal is a product worth purchasing?
Anika

Dear Anika,
I’m not mad about pre-paid legal. But a lot of folks who recommend and advocate it don’t like me very much, because I tell people it’s a bad idea. Here’s why:  Pre-paid legal will cost you about $300 a year. If you take $300 a year, and multiply that out over 10 years, you’re looking at $3,000. The truth is that the average American consumer doesn’t spend $3,000 on legal bills in this amount of time.
Lots of people will tell you that you miss out on tons of opportunities by not having a lawyer ready to jump into things. That’s a bunch of garbage! Once in a great while you may need the services of an attorney, but think about this: If the average person spent $3,000 or more over the course of 10 years on legal bills, while pre-paid legal took $3,000 from each of these people, pre-paid legal would go broke, wouldn’t it? They’d be handing out more in legal services than they receive in fees!

On average, you’ll come out better if you self-insure by having a good emergency fund in place. That way, you’ll have the money to pay for legal services should the need arise. And part of the reason you’ll have the money in place is because you didn’t give it to someone else—like pre-paid legal! 
- Dave

(Obtaining the deed)

Dear Dave,
We live in Missouri, and we just paid off our mortgage in July. Do we have to contact the mortgage company to get the deed?
Karen

Dear Karen,
It can vary depending on where you live, but I believe Missouri is a Deed of Trust and note state. The deed of trust is the lien against your house, and the mortgage company is supposed to file a release at the courthouse for that Deed of Trust. Next, they should send you a copy, but it’s not unusual for things like this to take three or four months.
They’ll also send you the original note you signed at closing. This should have “paid in full” stamped or written across it in big, bold letters. That note becomes your property. If they didn’t signify that the deal is done, you should write “paid in full” on the front yourself, and keep it in a very safe file forever. The original note is the documentation that you owed money, and the Deed of Trust contains the lien against your house. Typically, they will also send you a copy of the release of lien on the Deed of Trust.
Just understand that most mortgage companies move slowly. But don’t be afraid to start rattling a few cages if Christmas rolls around and you still haven’t heard from these guys!
- Dave

(What term level should I buy?)

Dear Dave,
My husband and I are both 37 years old, and we have two children, ages six and four. We follow your plan and we’ll be debt-free, except for our house, by next May. How should we determine whether to get 20-year or 30-year level term life insurance plans?
Valerie

Dear Valerie,
Based on your current situation, I think a 20-year policy would work out fine. However, if you’re planning on having more kids, you might want to look into a 30-year plan. Let’s take a closer look at your situation.
Twenty years from now, your kids will be 26 years old and 24 years old. Hypothetically, they both should have finished college by that time and be grown and living on their own. If you continue to follow my plan, you should also have paid off your home and be completely debt-free, and you will have been saving 15 percent of your income per year over those twenty years. That alone, on average, will give you more than a half-million dollars for retirement.
Do you see where I’m going? Eventually, you become self-insured by getting out of debt, staying out of debt, and piling up cash. It’s that simple! So, if you’ve got $500,000 or more in your retirement fund, no debt, and your children are grown and out of the house, even if you or your husband were to die at that point, the other would still be in great shape financially!
—Dave

(When do I close the cards?)

Dear Dave,
Do you recommend paying off credit card balances before or after you close the accounts?
Anonymous

Dear Anonymous,
Either way is fine. The point is to get rid of them, and stop using the stupid things! I like the idea and the finality of going ahead and closing the accounts, but doing that will sometimes spur credit card companies to do dumb, unfair things—like jack up the interest rates.
You’re on the right track, though. Personal finance is 80 percent behavior, and getting credit cards and credit card debt out of your life is a great first step in learning to behave with your money. You don’t build wealth or save money by using credit cards, and you’re naïve if you think you’re going to play around with a multi-billion-dollar industry and beat them at their own game. The only way to win against credit card companies is by refusing to play!
—Dave

(Dave’s start in financial counseling)

Dear Dave,
In the beginning, how did you go about establishing yourself as a financial counselor that people could trust? Did you initially offer free counseling to help build a reputation?
Anonymous

Dear Anonymous,
I never worried about whether or not people could trust me. I think knowledge helped offset reputation (or lack of one, back then), and I knew in my heart that I was an honest guy who had the ability to help people with their money.
I began doing financial counseling free of charge as a ministry at my church, but I have a degree in finance, and I had bought and sold more than 1,000 foreclosures at that point. That taught me a lot about the business and the bankruptcy side of things. And experiencing them for myself when I went broke gave me a unique perspective into what happens in those situations.
But it’s probably safe to say that people trust me more now than when I first started. There definitely wasn’t a line of people backed up around the block to see me in those days!
—Dave

(Collecting receivables)

Dear Dave,
My dad died earlier this year, and as a result my mom and I inherited his auto parts business. He had a lot of accounts receivable piled up, and we need to collect these to keep the business going. We live in a small town, where everyone knows each other. What’s the best way to handle this?
Susan

Dear Susan,
I’m so sorry for your loss. It’s never easy when a parent or spouse passes away. I’m glad that you and your mom are working together, though. Hopefully, it has helped you two make it through this rough time.
I would make a list of the accounts, and go visit them all personally. Just have a polite, sit-down conversation, where you explain your situation, and ask for their help in getting things current. See if they can take care of the bill today. If not, ask in a nice way if they can pay some of it today, and try to find out when they can pay the remainder.
Make sure you don’t hire an outside person to handle this situation. You and your mom can work the phones and pound the pavement. Most of these accounts are probably local folks, and there’s a good chance some friends and neighbors are in the bunch. You don’t want to be confrontational or unkind, because you will need these people if the business is going to survive.
At the same time, you need to stop running so many accounts receivable going forward. It’s a real pain having those things hanging over your head, and at some point it will become tough just to make a living. Otherwise, if you can’t clear this up and get the business running on a cash basis, you may have to close up shop!
- Dave 

(Pay extra on debt with separate check?)

Dear Dave,
When paying extra on a car note or mortgage payment is it a good idea to write a separate check?
Scotty

Dear Scotty,
Absolutely! You can include the extra check in a separate envelope with the regular payment, but make sure you write “principle only” in big, bold letters on the envelope and on the check. Also, include the account number in the notation line at the bottom of the check.
Some companies use payment booklets that have a box specifically for entering any amount you want applied directly to the principle. This method is okay, too. Just make sure you keep a good, solid record of the monthly and overall amount you’ve designated to be applied only to the principle.
Trust me, follow these guidelines and you’ll be much less likely to run into a sticky situation because some bozo threw the check into an escrow account or chalked it up as a pre-paid payment!
- Dave

(Invest above the requirement)

Dear Dave,
I’m a teacher, and the school system I work for puts 13.5 percent of my pay into a public teacher retirement fund. They also match this amount. I’ve read about your rule of investing 15 percent of your income toward retirement, so should I invest 1.5 percent into another retirement fund in order to max out my savings at 15 percent of my income? What do you think about the idea of opening another retirement account at a full 15 percent of what I make?
Patrick

Dear Patrick,
It sounds like you’ve got a pretty good pension plan through your school system. I can’t help but wonder, though, what would happen to the money if the system were to take a big financial hit. I’m not predicting bad things, but the truth is that you just never know what might happen. In other words, there’s no way I’d lean on this fund as my one and only source of retirement income. Never put all of your financial eggs in one basket!
I wouldn’t go as far as to pour an additional 15 percent into a different retirement plan, but I’d definitely look at putting seven to 10 percent into a Roth IRA. I want you to have some money that’s separate from the school system account just in case things go south with their retirement fund. If you’re married, and your wife works and generates income, she needs to be putting 15 percent into a plan, also. You can never have too much money during retirement!
—Dave

(intellectual behavior and will)

Dear Dave,
You talk a lot about delaying gratification in order to attain what you really want. This is such a difficult thing to do. What techniques do you use to make this happen?
Anonymous

Dear Anonymous,
You’re right, it is hard. Sometimes it’s very difficult to push away from that second piece of pie or get up off your tail and exercise. But learning to delay pleasure is part of the process when it comes to growing up emotionally.
I think when you’ve practiced it long enough your mind begins to grasp the concept that what’s waiting down the road is much better than whatever happens to be sitting in front of you at the moment. I didn’t want to get up and run this morning, but I know that I look and feel better when I do my roadwork. That’s why I made myself get out of bed early and run three miles.
The whole process has to start in the brain, and drop from there to the heart, where it promotes understanding and mature actions. So really, it’s an intellectual behavior that affects will. You have to logically and intellectually grasp the concept, then think about where you’re going and where you’ll end up as a result of your actions!
—Dave

(Recover first, plan later)

Dear Dave,
My husband died four weeks ago. He was 52 years old and had a heart attack. We always lived on a budget and were careful with our money, so we were debt-free when he passed away. He had a 401(k) and an IRA worth about $500,000 along with $200,000 in life insurance. He always handled most of the money, so I don’t know what to do about all this.
Nancy

Dear Nancy,
I am so sorry you have to go through this. Fifty-two is way too young an age at which to leave this world. I’m sure the suddenness of it all has your head spinning, too. Right now, you need to take some time to absorb what’s happened. You’ve experienced a devastating loss, and you should never make major life decisions when you’re hurting or your emotions are out of whack.
For now, I want you to roll the 401(k) and IRA into IRAs in your name. Then, just let them sit there. I’d also park the insurance money in a Certificate of Deposit for about six months. Take out enough to live on, but leave the rest alone for a while. Give yourself some space and time to cry until your brain gets used to things and can plug back into everyday life again. Then, after some time has passed, you can start thinking about what you want to do in the years ahead. You can also educate yourself in finance and how to handle your money once your mind has had some time to readjust.
Don’t try to be super woman right now. I know you miss him a lot, but always remember that he loved you enough to make sure you’d be in great shape financially if something like this happened. God bless you, Nancy.
—Dave

(Automobile pricing guide)

Dear Dave,
What is the difference between NADA, Kelley Blue Book, and Edmunds.com? Is one more accurate than the others, and how would you use them in negotiating the sale or purchase of a car?
Anonymous

Dear Anonymous,
NADA stands for National Automobile Dealers Association. A lot of their information is based on loan value, which basically is nothing more than what a banker wants to lend on a particular vehicle. Plus, it seems to me that overall NADA is oriented more toward the dealer than the consumer. KBB and Edmunds are both pretty fair in terms of real world value, but you have to gather up pieces of information in order to get an accurate assessment.
I always look at the KBB private sale section when I buy or sell. Then, I’ll print out the information and use it during the negotiation. You could also shop other car sites online and find out what they’re asking for the same kind of vehicle. If you gather up several reference points of information you’ll begin to see a pattern evolve, and you’ll end up with a pretty good idea of fair market value.
Let’s say one site lists a car at $12,000, and another says $13,000. You could turn around and honestly tell a buyer that you’re offering a really good deal at $10,000. You could also toss out the high-end prices and the lowball numbers to come up with a good middle-ground figure that’s fair to both parties!
—Dave

(Showing Mercy)

Dear Dave,
I have tenants who have been perfect in paying rent on time for almost a year. Last month, the woman lost her job, and when I went to collect the rent the other day, she said she didn’t have any money. I’m pretty sure they used part of it for a car payment and the electric bill, and I know they need these things. Still, I’m torn over how to handle this and how much mercy to show.
Alex

Dear Alex,
You’re right, what they spent the money on were things they needed. At the same time, they probably knew the rent was due and when it was due. Since you know about their situation, and you’re their landlord, it might be a good idea to offer to try and formulate a plan that would help them get through this tough time.
If it were me, I’d sit down with them and make a budget and list of priorities. Food comes first, water and lights after that, then rent, and finally the car. Get into their business a little, and find out what else is going on in their lives. You have to be fair and firm to be a quality landlord. I’m all about helping people who need help, so I’d be willing to cut them some slack if they’re cooperative and literally have to choose between feeding their kids and paying me. But if they insist on misbehaving with their money or having parties on the weekend, I’d have no problem telling them to check out and find another place to live.
The biggest thing is to treat them the way you would want to be treated if the roles were reversed. I think most people want to do what’s right, but you want to feel good about extending mercy when, and if, it’s appropriate.
- Dave

(At What Age Do I Need a Living Will?)

Dear Dave,
My husband and I have been married for three years. I’m 25 and he’s 29. We have no children yet, but we’re trying to put our financial lives in order. At what age do you recommend getting a living will?
Denise

Dear Denise,
Every adult needs a last will and testament and a living will. They are not the same thing. A traditional will contains instructions for the disposal of your estate. In other words, it tells who gets what after you die.
A living will is sometimes called “the Terri Schiavo document.” If you end up in a situation where you are unable to speak for yourself, such as a coma or a vegetative state, a living will dictates whether or not you want doctors to keep you alive using artificial means. This is not the kind of decision you want left to a doctor, family members, or a court!
- Dave

(What’s included?)

Dear Dave,
I’ve heard you say that your mortgage payment shouldn’t be more than 25 percent of your take-home pay. Does this figure include taxes and insurance, or just principal and interest?
Anonymous

Dear Anonymous,
That figure includes taxes and insurance. Just remember, the whole idea is to make sure your house payment is manageable. You don’t want to have so much money going toward your mortgage every month that you can’t enjoy life or take care of your other financial responsibilities.
I figured out a long time ago that I’ve got more money when I don’t have debt. It’s a pretty simple formula, isn’t it? If you want to build wealth, you have to get out of the payment business. I don’t beat people up for getting a 15-year, fixed-rate mortgage, but you don’t want all of your income going toward your house payment, either. If half of what you make every month goes straight to the bank, you’ll have less money for other stuff. Plus, after a while that great house will stop looking so great. It’ll be a chain around your neck instead of a place you love to call home.
Don’t try to figure out how much debt you can get into. Instead, figure out how much debt you can get out of!
—Dave

(Missing out)

Dear Dave,
I’ve only got a high school education, and I’m stuck in a dead-end job. I’ve always been a hard worker, so the 70-hour weeks don’t bother me. However, I do miss getting to spend time with my kids. I feel like I’m missing out on their lives. Do you have any advice on how to change my situation?
Scott

Dear Scott,
I think you’ve already solved a lot of the problem by realizing that you’re like a mouse stuck in a wheel. You know you’re not getting anywhere, and you’re ready for things to change. Identifying the problem is a huge step in solving the problem.
Now, mechanically and logistically, how do you make the change when you’re handcuffed to a job that works you 70 hours a week? You’ve got a family to feed, so you can’t just quit your job. But you can talk to your boss, and see if the company will back down on your hours a little bit. Let them know what’s happening with your family, and that you’d like to take some classes and improve yourself and your value in the workplace.
But before you do any of that, you’ve got to have a definite direction in mind. The idea of making more money and working less isn’t the answer. You need an in-depth, detailed game plan for where you want to be in the next three to five years and how to get there. It may involve going back to school for some classes, or even getting a full-blown degree. If you identify your long-term goal in detail, it will lead you to some of the short-term goals that will help you arrive at your final destination.
The best book I’ve ever read on this kind of thing is 48 Days to the Work You Love by Dan Miller. He’s my all-time favorite career coach. He’ll lay out the steps to discovering what it is you really love to do and how to get there.
God bless you, Scott!
—Dave

(Asking for a Raise)

Dear Dave,
What’s the best way to ask for a raise at work?
Anonymous

Dear Anonymous,
I think the first 10 sentences that come out of your mouth should be about gratitude. Let your boss know how much you like being there and all the things you appreciate about the business and your job. It’s always a good idea to get the point across that you’re grateful for what you already have before you go looking for more.
The next step might be to detail the attributes you bring to the company—the traits, habits and accomplishments—that make you valuable to the organization, and why they make you more valuable than your paycheck currently indicates. Then, ask your boss to reconsider your compensation based on these factors. It wouldn’t be a bad idea, either, to do a compensation study based on the salaries of people in your line of work, who are employed by comparably-sized organizations in your region. Asking for a raise is one thing, but putting the research into your request that proves what you’re asking for is fair and well reasoned never hurts!
Smile a lot and make sure you keep any hints of bitterness or anger out of the conversation, too. You’re trying to persuade this person to see things your way. Just remember, no matter how convincing your argument may be, the answer—for whatever reason—could always be “no.” You need to be ready to accept it with the same professionalism and grace that went into your request. If you don’t, you just might knock yourself out of a raise or promotion somewhere down the road!
- Dave 

(We’re Safe From Murphy, Right?)

Dear Dave,
My husband is getting ready to retire. With his pension, we’ll still have an income of about $52,000 a year. He thinks we don’t need an emergency fund because we’ll still have good money coming in on a regular basis. I’d feel better if we had one but I’m wondering what you think.
Karen

Dear Karen,
Of course, you need an emergency fund! If you’re breathing, you need an emergency fund!
A good pension can feel pretty solid, but there’s always the possibility of lost income or other emergencies. What if your car dies, or one of you experiences a major medical event? Life has teeth, and it can bite you at any time. A good, old-fashioned rainy-day fund will keep you from going into debt when the unexpected happens.
I recommend an emergency fund of three to six months of expenses. Put it in a good money market account with check writing privileges and a decent interest rate. That way, your money will work for you. With a solid, steady income you can lean toward the three-month side. Otherwise, I’d save up five or six months of expenses.
A fully funded emergency fund is great Murphy repellant, Karen. It will make you both feel better, plus it can turn a disaster into nothing more than a minor inconvenience!
- Dave

(short sale behind the scenes)

Dear Dave,
What goes on behind the scenes with a short sale? We’re trying to buy a house that way, but it seems like it’s taking forever.
Jennifer

Dear Jennifer,
A short sale, of course, is when a mortgage lien holder sells a house short of what it takes to pay off the mortgage, but gives a full release and delivers a clear title to the purchaser anyway.
Let’s say you want to buy a house with a $250,000 mortgage for $200,000. In that scenario the lien holder will be taking a $50,000 hit, so it has to be convinced that this is as much as they’ll be able to get for that particular house.
The lien holder will do what is called “due diligence.” It will order inspections and appraisals, and maybe even collect comparables – statistics and documentation on how well homes in that area are selling, and at what price range. That kind of stuff takes time.
The main thing working against you right now, though, is that while the number of short sales has risen dramatically, the number of people handling these transactions has not. Many lien holders are simply overwhelmed and understaffed, and some of the folks they have handling these deals are not exactly experts when it comes to short sales. Hang in there, Jennifer. This could work out really well!
- Dave

(curious about credit report)

Dear Dave,
I noticed recently that there have been several instances of companies asking for copies of my credit report. I’ve not done any business with these companies, and was under the impression they could only do things like this if you were trying to open an account with them.
Lynn

Dear Lynn,
According to the guidelines of the federal Fair Credit Reporting Act, anyone with a valid business reason can check your report with or without your permission. It’s not unusual today for employment applications to state that the company you’re interviewing with can even pull a copy of your credit report to use as part of their employee screening process.
If you haven’t been job hunting or applying for credit cards lately, it sounds to me like you’ve been hit with a load of marketing inquiries. Like most folks around the country, your mailbox is probably full of unsolicited credit card and home equity loan offers. The good news is that you can contact your bureau, and request a block for unsolicited marketing inquiries. This will help prevent companies from crawling through your bureau for the sole purpose of offering you stuff you didn’t request!
- Dave

(spoiled all around)

Dear Dave,
My husband and I are not on the same page when it comes to money and our three teenage daughters. I think they should learn to work and make some money, but he doesn’t care if they work or not. Plus, he insists on regularly buying them big-ticket items they don’t deserve like cameras and fancy phones. What can I do about this?
Susan

Dear Susan,
You’re right about one thing. Kids should learn to work and make money at an early age. I’ve given nice gifts to my kids, but the difference is that they work and make money for themselves, too. The nice gifts I gave them were for special occasions. Showering them with expensive toys all the time was not our way of life.
In this situation, your husband is allowing them to be nothing but consumers. They’re not learning how to work, and they’re not learning how to save or give. This is setting them up for a lifetime of unrealistic expectations, and it’s a really bad plan. If nothing changes you’re going to end up with kids who think they’re princesses. They’ll believe the entire world revolves around them, and the poor guys who marry them will spend the rest of their lives trying to keep three spoiled little girls happy.
Still, I think the biggest problem here is that you and your husband are experiencing a marital breakdown. If the kids were taken out of the picture, the same problems would still be there. The difference is that they would manifest themselves in other ways. He needs to stop being so impulsive, but maybe you could lighten up a little and try to establish some guidelines as to when gifts are appropriate. There’s a middle ground you guys can reach, but it’s going to take some time and effort. Most of all it means the two of you are going to have to work together!
- Dave

(worried about the future)

Dear Dave,
I’m worried about my parents and their finances. They’re both in their fifties, and they’re not being very responsible with their money. I’m especially concerned about what this could mean when they reach old age. Do you have any advice on how I could help them manage things better?
Corey

Dear Corey,
It sounds like you may have already run into what I call “Powdered Butt Syndrome.” Once someone has powdered your butt, they really don’t want your advice on anything. Sometimes parents will grow to the point where they respect and even seek counsel from their children. But the reality is that most adults simply don’t want unsolicited advice.
I’m on the radio every day giving financial advice to people, but I don’t grab them by the throats and make them listen. I encounter or hear about people doing dumb things all the time, and in most cases I mind my own business. Now, it’s a different story if someone asks for my opinion. At that point, I’m obligated to tell them what I think.
But if the person I’m worried about is a good friend or member of the family, I’ll try to put myself in a position where they might ask for advice. One good idea could be to tell them your story. You could describe your past problems, how you fixed them, and how much easier and secure things are now. Sometimes, when you approach a person with this kind of spirit, it becomes easier for them to get into subjects they ordinarily wouldn’t talk about.
- Dave

(knowing when to move up)

Dear Dave,
I started a small business a few years ago. Since then, it’s grown larger than I anticipated. When should you change from a sole proprietorship to something else?
Mike

Dear Mike,
I would incorporate the business into a Sub-S Corp when it becomes large enough that liability and lawsuits are a concern, especially if you’re in a business that is litigious in nature. I ran my company as a sole proprietorship for a few years, but once we grew to 20 or 30 team members and saw the potential for bad things to happen, we changed to a Sub-S.
Incorporating is also a good idea if you’re worried about protecting your personal assets. If you’re worth a few million and decide to open a business, the last thing you want is for somebody to sue you and take all your money because they fell down on your property and bumped their head. You can keep that from happening by standing behind what lawyers call “the corporate veil.”
Make sure you’ve got liability insurance and good basic business insurance in place, too. A corporate veil is always a good idea once you’ve got some wealth or your company starts to generate a lot of money!
- Dave

(putting the tithe in the right place)

Dear Dave,
We’ve always gone to church and given our tithe, but recently we’ve decided it’s time to find a more grounded place to worship. During this time should we continue to give to our current church, or give to a charity instead? Does God really care where we give this money?
Amanda

Dear Amanda,
I appreciate that you take the tithe and giving very seriously, but I doubt that God is wringing His hands and worrying about the situation. I mean, it’s not like He needs the money. Giving isn’t about making a deposit into God’s bank account or building up brownie points, and tithing isn’t a salvation issue, either. It’s about changing our hearts and our minds. It’s about being a little less selfish and a little more Christ-like. I think it makes God smile when we put other people’s needs ahead of our own wants and desires.
There are some pretty strong indications in scripture that a tithe – which is a tenth of your income – should go to your local church. So I’m not sure that a generic charity is the answer in this situation. I’ve had times in my life when I changed churches, and in the periods when I didn’t have a church home I’d write out the checks just like normal, but leave the “pay to the order of” portion blank. This way, the money was already accounted for in my mind and in my checkbook. Then, when I found a place I really liked, I’d complete the checks and give them to that church.
Honestly, Amanda, I think you’d be okay continuing to tithe to your current place of worship until you find a new church home. It would probably be okay, too, if you did what I did, or gave your tithe to one of the churches you visit while you’re looking. God’s not going to whack you on a technicality like that, and throw you in the penalty box. It’s all about learning to be a giver!
- Dave

(the car is killing me!)

Dear Dave,
My boyfriend was supposed to help me pay for my car, but he moved out and left me. Now, I can’t afford the $500 monthly payment. I work 35 hours a week, but I only make minimum wage. The car is still worth about $19,000, but I owe $20,000 on the loan. What can I do?
Rachel

Dear Rachel,
You went car crazy, and bought a vehicle that was way out of your league. There’s only one thing you can do – sell the car!
Right now, your entire financial world is wrapped up in paying for this thing. Having a live-in boyfriend, and relying on him to help make the payment, was a big mistake, too. When he left, the financial support went with him.
At this point, all you need is enough credit to cover the hole that you dug. Go to your local bank or credit union, and try to get a very small loan for about $3,000. If the car will sell for $19,000, then sell it, and use $1,000 to cover the difference. Then, take the remaining $2,000, and buy yourself a little junker. I’m talking about basic, ugly transportation. Next, pick up a part-time job on the side, and work like crazy for a few months to get that loan paid back as fast as possible.
This is a painful process, but there’s a good side. When it’s all said and done, you will have learned a lesson that will last you the rest of your life. You won’t make this mistake again!
- Dave

(of nerds and free spirits)

Dear Dave,
Does it matter who keeps the checkbook when you’re married? I’m not good with numbers, but I feel strange because my wife handles these things. Is there anything wrong with this situation?
Daniel

Dear Daniel,
There’s nothing at all wrong with your situation. We all have different gifts, so it just makes sense that whoever is better organized, or better with numbers, should handle this kind of thing.
In each marriage there’s a nerd and a free spirit. The nerd is the one that’s organized, and very good at keeping everything in place. The free spirit is not a detail-oriented person. This doesn’t mean they’re not concerned, or that they’re irresponsible, but they just aren’t as administratively-gifted. They don’t get a rush when the checkbook balances out.
However, that doesn’t mean that whoever keeps the checkbook should make all the financial decisions, either. Those decisions, like all others in a marriage, should be made together with input from both the husband and the wife. When you do a budget, you should both sit down together, and come to an agreement on where the money’s going each month.
Trust me, if you follow these guidelines the checkbook will be accurate, plus you’ll experience increased unity in your daily lives and better communication in your marriage!
- Dave

Mortgage – NAD
(Ready to buy?)

Dear Dave,
I graduated from college in May, and I already have a job in my field. It was a part-time position that went full time, so I already have $15,000 in an IRA and about $23,000 in savings. I’m also debt-free, because scholarships paid for my education. Am I ready to buy a house?
Zack

Dear Zack,
You are the man! This is an awesome position you’re in right now!
Financially, you’re okay to buy a house. I do have one slight hesitation, though. There are going to be lots and lots of things happening in your world during the next few years, and there’s a possibility you’ll end up moving—maybe for a girl, or even another job—during this time period. It’s going to be a time of transition, and having a piece of real estate tied around your neck could be a huge pain. But if you’re sure that’s where you want to be for a while, then it’s not such a big deal.
Keep in mind that there’s a word for real estate that sells quickly, and that word is cheap! Lots of times, the only way to get out from under something like that fast is to practically give it away. It’s a great time now to buy a home, though. It’s like they’re on sale. Interest rates are low, too.
Don’t use the entire $23,000 as a down payment on a place, and keep an emergency fund of three to six months of expenses set aside. Make sure you get a 15-year, fixed-rate mortgage, too. If you play this right, Zack, you’re going to be sitting pretty!
—Dave

Career – NAD
(No experience, apply anyway?)

Dear Dave,
Do you think it’s a good idea to apply for a job if you have a degree in the proper field, but no real work experience in that area?
Denise

Dear Denise,
Absolutely! Does this mean you’ll get the job? No, but I can promise you one thing: The only sure-fire way to make sure you miss out on a job is by not applying for the position in the first place.
Line up all the interviews you can for jobs for which you have a reasonable chance of being hired. Then, go in there with your head held high, and impress them with how articulate you are and how you carry yourself. Use your style, intelligence, education, and confidence to sell yourself and your ability to jump in, learn quickly, and get the job done!
I’ve met lots of people who say they have 20 years of experience, but it’s really more like one year of experience 20 times. That kind of “experience” is useless. I’ve also met lots of sharp people without experience, but you can tell they’re the kind who will put their minds to work, think outside the box, and figure out a way to get things done. As an employer, if I’ve got a choice between the two, that’s the one I want to bring onto my team!
—Dave  

The wrong way to pay off

Dear Dave,
I’ve got about $15,000 in my 401(k). I also owe about $15,000 on my car, and the payments are killing me. Should I cash in my 401(k) to pay off the car, and free up money in my budget?
Misty

Dear Misty,
I love the fact that you want to get rid of your car payment, but I don’t want you to cash out your retirement plan to make it happen. If you use your 401(k) they’ll charge you a 10 percent penalty, plus your tax rate. This means you’ll lose anywhere from 30 to 50 percent to the government, and they get too much of your money already!
If it were me, and I could pay off the car in 12 to 18 months or less, I’d live on rice and beans, and push on through until that car payment was out of my life forever. If that’s not going to happen, then you need to get an ad in the paper tomorrow and sell the car!  
- Dave

The emotion of eating

Dear Dave,
I love your plan, but I think my husband is attached to eating out. Budgeting is very hard for him, and the cost of his fast food lunches is making it difficult for us to get by financially. On top of that, he’s taken a salary cut, and I’m working a part-time job to help us get by. Can you give him some tough love from a male perspective?
Valerie

Dear Valerie,
It sounds to me like you’ve been way too nice. You’re acting like a mother dealing with little kid, and that’s not a good way to relate to a husband. Plus, if you guys are having money problems, the only time either of you should see the inside of a restaurant is if you’re working there!
A man has several jobs in life, and one of those is to take care of his wife and children. You’re wife shouldn’t have to work so you can stuff your face with fast food. When you married him, you didn’t want a little boy. You wanted a man. He needs to grow up and start acting like one!
That being said, my perspective probably won’t help. There’s a saying that goes, “Those convinced against their will are of the same opinion still.” He needs a serious change of heart. You said you love my plan, right? Then sit down with this guy, and show him the numbers. Show him where all the money is going, and tell him it’s just plain wrong for him to eat out all the time while you have to work just to make ends meet. This isn’t just damaging your finances. It’s damaging your relationship.
People can do all kinds of things when they’re stressed out because of money problems. I’m sure taking a cut in salary was a blow to his self-esteem, as well. However, it’s time for a strong wake-up call when these behaviors start to have a negative impact on family and finances!
- Dave 

Teaching them how to spend

Dear Dave,
We follow your plan and give our kids commissions for working around the house. We also try to teach them about spending, saving and giving. Still, it bugs us when they blow their money on junk, or on things we don’t approve of, and immediately start worrying about the next thing they can buy. Should this bother us, and what can we do?
Mike

Dear Mike,
Of course it should bother you. It bothers me just to hear about it!
 It sounds like you’re on the right track when it comes to handling money, but your kids are badly in need of adult leadership. There are some things that are just a bad idea because they’re getting ripped off with low-quality stuff. But give them enough rope to hang themselves once in a while, too. That way, when they buy something cheap that breaks in a few days, you can say, “I told you so.” Only don’t use those exact words, although you’ll be tempted. Just remind them of the principle involved.

Don’t be afraid to draw the line and let them know that there are things you don’t want in your house. If there are video games or music that you feel are inappropriate, then they don’t get to buy that stuff – period! If they put trash, filth, and nastiness into their minds and spirits, they’re going to become trashy, filthy and nasty. It’s not anarchy; it’s responsible parenting! You guys are the leaders of a benevolent dictatorship, and the kids should learn to appreciate that fact and be grateful when you’re benevolent.
- Dave

Another perspective

Dear Dave,
I’m a big fan of your work, but I have to ask one question. Why do you advocate belief in religion for dealing with financial hardship, even for those who don’t believe in religion?
Daniel

Dear Daniel,
First, I don’t believe that religion is the answer. I do, however, advocate God. I believe with all my heart that there is a God. I also believe that He’s in control, and that He’s crazy about us and wants good things for us. That’s my value system. It’s how I approach every equation, whether it’s financial or not.

I’m not mad at people who don’t feel this way. When someone who’s in debt or behind on their mortgage asks advice, I don’t tell them the answer is to go read their Bible. I give them financial advice. If they speak in Christian terminology, I answer in Christian terminology because I’m a believer. I know how to speak the language and can connect with them. But you’ll never hear me beat someone up just because they’re not a person of faith. At the same time, I’ll never back away from the idea that God is real just because someone else isn’t a believer!
Personal finance is 80 percent behavior, and 20 percent head knowledge. I’ve said that for years. If people can grasp that one statement, I can teach them lots of great stuff. Yet it would be naïve to try and have a discussion about behavior modification without including relationships, emotions, psychology, and spirituality. That’s not just my opinion. It’s a logical, well-rounded view of the facts.

But when it comes right down to it, I advocate a belief in God and study of the Bible as the answer to almost every question, because they will take you places you need to go!
- Dave

A very high lifestyle

Dear Dave,
I’m 23-years old. I make $23,000 a year. I have a Rolex and a BMW. I also have $20,000 in credit card debt and a $26,000 car loan. I’m having a hard time making all the payments. Would a debt settlement company be a good idea?
Darren

Dear Darren,
Debt settlement companies are awful. They charge you for doing what you can do on your own for free! Let’s get to the root of your problem. What were you thinking? You can’t get rich while you’re busy trying to look rich! Take a look at the stuff you’ve bought. I expect the watch and the car are only part of the picture. Do you see a pattern? I do.
The average millionaire doesn’t wear fancy clothes and drive a fancy car. Your world is all about flash and looking good, but real life and real life finance are not.
Sell the Rolex. That heavy watch is holding you down. Sell everything that isn’t absolutely necessary. Sell the car, too. Get a small loan to make up the difference and pay it off as quickly as possible. It’s better to owe $6,000 than $26,000 in debt.
It’s always easier to build wealth when you don’t have payments hanging around your neck. Work an extra job nights or weekends. You’d be surprised how much you can make throwing boxes at UPS or delivering pizza.
You’ve made a really big mess, but with some hard work you can clean it up. I figure it will take you about 18 months. Why don’t you surprise us both and do it quicker than that?
- Dave

How to not be a hypocrite

Dear Dave,
My husband and I are taking your classes. We own a roofing company. We offer six months, same as cash, and we accept credit cards. What are your feelings about our doing this? Does it make us hypocrites?
Monique

Dear Monique,
If I accepted credit cards, it would make me an absolutely huge hypocrite, but you don’t do what I do for a living.
If this bothers you, it might be a good time to search your heart and ask yourself if these practices are blessing your customers. If you conclude that they are not, and you decide to discontinue those financing deals, you’d better come up with some other marketing strategies. You will lose clients over such an unusual decision!
Of course you could still offer some of those kinds of deals while actively discouraging their use. You could tell your customers that if you were in their situation, you’d just save up for a few months and pay cash rather than using a credit card or other financing options. That way the decision is theirs. But how will they react to such an uninvited suggestion? The last thing you want to do is encourage more credit, but the next-to-last is to run good business off.
No, I don’t think you’re being hypocritical, Monique. You have some big decisions to make about the quality of your customer service, though. Ten years from now, you want to know you tried your best to do the right thing for them, and you’ll always want to know you’ve done the right thing for your business.
- Dave

Should he spend more?

Dear Dave,
My husband makes significantly more money in his job than I do in mine. Since he makes more, he feels he should be able to spend more. He wants to set up an account where we both put 20 percent of our income for discretionary spending. Of course, his 20 percent would be more than my 20 percent, and I feel like we should both put in the same amount. What do you think?
Lisa

Dear Lisa,
I’m sure your husband is basically a decent guy, but he’s really being selfish and immature about this situation. It’s a very bad plan. My wife is pretty gentle and forgiving, but if tried that mess at home she’d get very un-gentle in a hurry!
Think about it this way. There are lots of families out there where only one person works outside the home and generates income. Would it be fair to say that whoever brings home a paycheck is the only one who can have fun spending a little money once in a while? Of course not! When you two were married, the preacher pronounced you “as one.” That means you have one income, and that’s our income; just like it’s our house, our kids or our dogs. Marriage is not a “me” proposition, it’s always a “we” thing. And it sounds like your husband needs to be reminded of this!
- Dave

The key to being a great salesman?

Dear Dave,
What’s the key to becoming a great salesman?
Brent

Dear Brent,
I can sum it up in one word – serving. And don’t think for a second that serving means being subservient. I’m talking about being proactive, and making an effort to ensure that customers and potential customers alike are served well. Serving means you’re excited about what you have to offer, and you believe you’ve got a great product at a great price. It means you’re determined your customer is going to have a great experience, and if you happen to hit a bump in the road you will take care of it in a way that will make them forget it ever happened.
Serving is an attitude. You have to provide goods or services in a way that makes your customers willing to trade their time or money – things that are very precious to them – to interact with you and your business. You can pressure people if you want, but that’s going to lead to a dull and frustrating life of one-shot deals. But if you serve people well, you’ll not only have clients for life but they’ll also send all of their friends your way.
If you help enough people, Brent, and make that your first order of business, you’ll never have to worry about money. That’s a different attitude, isn’t it? But I’ve got news for you – it works!
- Dave

The level pay utility option

Dear Dave,
Our utility company offers a level-pay option. They average out our bills over the last 24 months, and bill us a consistent amount each month based on that average. Do you think this is a good idea, or would you just pay the regular bills?
Christy

Dear Christy,
Lots of people like the idea of having a level of predictability built in to their utility bills. There’s absolutely nothing wrong with this idea, as long as you have a good, steady income. You need to be aware, though, that most of these plans have a “make-up” schedule attached to them. You’ll get something back at the end of 12 months if you’ve overpaid, but you have to make up the difference if the payments come up short.
Ultimately, if evening things out from month to month makes you feel better or helps with your budgeting process, then I say go for it. You’ll still only pay for the services you use, and the utility company still gets their money, so it’s really just another path to the same destination!
- Dave

How multi-level works

Dear Dave,
I’ve been approached about becoming part of a telecom business opportunity that some of my friends say is a multi-level operation. I’ve heard good and bad things about these companies, but I’m still not sure what they are or how they work. Could you explain?
Brent

Dear Brent,
If you recruit people and get paid on the basis of what they make, then you’re talking about a multi-level operation. These companies have both good and bad reputations that have been well-earned. Basically you’re not going to be paid for being in the telecom business, you’re going to be paid for recruiting and motivating large numbers of people who will go out and recruit other people themselves. You may make a little bit by actually selling the company’s products and services, but most of the money will come from your building a sales force which then builds a sales force, ad infinitum..
You could make good money if you have the talent and ability to hire and train lots of people over a long period of time, assuming you got in early when the pool of potential new hires was still big. The bad thing is that these operations take on a cult-like level of devotion and enthusiasm. People dive in head-first, and before you know it they sound like cheerleaders and look at everyone in their lives as potential recruits. And remember, each succeeding level has to be bigger than the one above it in order for anyone to come out ahead.
Some folks get so cranked up over the company, that they start “exaggerating” the possibilities. Sorry, but you’re not going to work a couple of hours a day and make $100,000 a year! If you make six or seven figures a year, it’ll be because you worked your tail off and brought in a bunch of bodies.
Don’t kid yourself into believing you’ve found the answer to easy money. It just doesn’t happen that way!
- Dave

Is Dave’s investing system sound?

Dear Dave,
Considering that the current economic situation is nearing a calamity, do you feel that your Total Money Makeover investment strategies are still sound?
Anthony

Dear Anthony,
First, let’s review the investment strategies in The Total Money Makeover. Pay cash for real estate so that you own it free and clear. Invest with a long-term mentality in America’s best and brightest companies. Put your money into good, growth stock mutual funds – so that you can be well-diversified – with companies that have very long and successful track records.
I always have – and always will – consider these to be very sound investment strategies! I think you’re being a little dramatic when you refer to the stock market situation as “nearing calamity.” You can live in fear and concentrate on all the negative opinions circulating out there, or you can choose not to live in fear. I’m not talking about some Pollyanna view of things. Use logic, a little reason, and some careful observation of the facts. The truth is that the stock market has gone up about 30 percent since March 9. As an investor, you’re in K-Mart and the blue light is on! That sounds like a good thing to me!
- Dave