QUESTION: Ricky in San Diego, CA, is having an argument with his dad over real estate. Ricky and his wife currently own a rental property in addition to their home, and they’re trying to decide whether or not to sell the rental in order to pay off a big chunk of their mortgage. Their primary residence and the rental are their only debt, with $132,000 owed on the primary and about $80,000 owed on the rental. They make $110,000 a year, and Ricky says they could sell the rental for about $160,000. Dave walks Ricky through the financial possibilities and gives some advice on boundaries where family and friends are concerned.
ANSWER: I would love for you to listen to your dad for advice, but I would not be arguing with your dad about what you are going to do with your money. You’re a man. This is like I’m not going to argue with my friends about what I’m going to do with my money. I might have a discussion, I might seek counsel, and then I’m going to make a decision and do what I’m going to do. I don’t need to argue with anybody. It’s my money. There’s no argument needed. I don’t know if you just used the incorrect word there for how the discussion went down, but I wanted to kind of correct that as a boundary issue in your family.
No, I would not sell the rental today. I would pay your house down aggressively. When you get it paid down far enough that the sale of the rental would pay it off, then it’s a consideration. But if you’re making huge progress and you want to keep the rental while you pay down your house, that’s okay, too. You’re doing very well financially for a man your age in San Diego, California. You’re doing very well.
So today I would just begin to pay very aggressively on your home. When you get it paid down, then you’ve got a discussion to have.
QUESTION: Lisa is on Facebook, and she asks Dave if it’s wise or foolish to insure a smartphone. She learns that Dave’s view on insuring items like that hasn’t changed.
ANSWER: No, I don’t insure inexpensive things like that. And if you say it’s not inexpensive, then that means you probably shouldn’t have that phone.
If a smartphone is expensive to you, then you bought a phone that’s too expensive for you. In your world, if you tear up a phone and you can’t replace the phone, well, you’ve got a phone you can’t afford. No, I don’t insure them.
And I don’t finance them!
QUESTION: Melissa contacted Dave via Twitter to ask his opinion of churches encouraging members to do e-giving with credit or debit cards. Dave talks a little about this scenario, and he encourages people to use debit cards instead of credit cards.
ANSWER: Well, I don’t believe in credit cards. So I’m not fond of churches telling people to use a debt vehicle to pay their tithes. Very few people distinguish between a debit card and a credit card when taking them.
I think e-giving is fine, but if I were the pastor—and we had an e-giving process—I would encourage people to use debit cards and not credit cards, that’s all. There’s nothing wrong with e-giving, like an ACH kind of thing or a draft. A lot of people do that and like the ability to give online.
I just don’t want to have a giving situation to your church turn into debt to you. And it surely can when it’s a credit card. That’s the bad part. The rest of it’s fine.
QUESTION: Dave receives a note in which the writer says that when people work for a company, they do not owe the company loyalty. As you might imagine, Dave feels the writer has a lot to learn about things such as loyalty, character and ethics.
ANSWER: That makes me want to be an old man and say something like, “That’s what’s wrong with this generation!” I want to say something like that to an idiot response like this. Let me give you a story.
My grandfather passed away many years ago. He worked for Alcoa Aluminum in Alcoa, Tennessee, for 38 years. Once he went into my mom and dad’s home, and my mom pulled out a roll of Reynolds Wrap—the competing aluminum foil to Alcoa aluminum foil. She bought the wrong brand. He ripped it out of her hands, threw it in the trash and said, “Never buy from the enemy!”
That’s the kind of loyalty people had in those days to the company they worked for—the company that took care of them and fed them. Now, I understand that many companies today aren’t as loyal to people as they should be. I get that part. But that’s irrelevant to how you have your ethics. Your ethics are you’re loyal to who pays you, and if you can’t be loyal to who pays you then you need to change to someone you can be loyal to. That’s called character!