Dave Ramsey

Parents swiping from me!

Question: Eddie's parents are in their 70s and doing all right with money, but they have taken money from him and have no remorse about it. They feel they are entitled to it since they raise him. He parked one of his cars on their property to restore it, but they sold it without his permission.

Dave Ramsey's advice: You're going to have to start treating them differently because they are acting weird. You can't allow them access to any assets because they are stealing them. Just chalk this stuff up to family weirdness, which we all have at some point in our life. But don't park anything over there or they will steal it. Make sure all your checks get mailed to you.

I agree with you that it's inappropriate behavior on their part. If it was $50,000, you'd have to take action. But $1,500 won't change your life. It's disappointing and emotional, but I'd just walk away. If it comes up one more time, I'd have a discussion with these characters. If you steal from me again, I'll have to let the police know. Those are relationship-ending words, so be careful.

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No more abuse

Question: Tammy just got out of an abusive relationship, and all the financial burden is on her since she has a 1-year-old son. She makes $1,700 a month and doesn't know what to do, because the strain is getting to her.

Dave Ramsey's advice: What you've done to take care of yourself and your son is the best thing you could have done. You made the right decision, and I want to affirm you on that. He belongs in jail, and that's where he is. We are going to prioritize. The most important thing is your safety, and you've taken care of that. The next most important thing is to feed yourself and your child, clothe you both and pay the rent and utilities. Forget your credit score, because we'll get back to cleaning up some debt. Right now, you only make enough to eat, and that's all you need to do.

Don't under any circumstances let the debt people get in front of you taking care of your family. I want you to pay those debts someday, but the idea here is that they are NOT first in the list of priorities. If you're not involved in a great church, then get involved in one. You need some good people to be involved with to help you through this. You may end up moving to be closer to your parents. Asking for help doesn't mean you're a charity case, it means you need help and you'll get it.


Dad's heading for disaster

Question: Shelly is fighting with her dad. He just read a book saying that home equity is a mistake and you should get a mortgage and pay interest only and invest the money. Can Dave give her some arguing points to counter this? Dave says the argument starts by acknowledging that there's no argument here.

Dave Ramsey's advice: When you only do the math of a situation, you leave out the stuff that can't be quantified, like relationships or risk. Math can fail in a discussion. When you say you'll borrow all you can on your home, you put your home, the place where your kids sleep, at risk. To run a formula that says you can borrow at 5% and invest at 12% and make that 7% every time, that's a very naïve formula done by a smart man, in this case your father. He's smart but not wise.

Even with the math, your dad's formula doesn't work out. Investing at 12% will turn to 9.4% after taxes. Now you are comparing something with risk (the mutual fund) vs. the non-risk of owning your home free and clear. There's no argument here. He probably can't have his mind changed on this, but you can still love him and be father-daughter.


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