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Ask Dave

Dave's Prescription for Financial Healing

Laura has hit rock bottom. She's trying to get current with her bills and get her husband on board. Dave says most of their problems come from not paying attention.

QUESTION: Laura in Austin just got Dave’s book and has hit rock bottom. She’s trying to get current with her bills and get her husband on board. Their car was just repossessed two days ago. With their tax refund, they can get the car back. However, her husband is trying to start a new career and is concerned about the repo on his credit. Dave says most of this comes from not paying attention.

ANSWER: Let me tell you what I’m hearing. I’m hearing two very smart people who have been asleep at the wheel. You’ve been carrying the responsibility of the bill paying, and no one has been telling anyone no. You’ve not been telling yourself no. He’s not been hearing no. You guys just buy whatever the flip you want to buy. You’ve been acting like you’re in Congress. You make too much money and you’re too smart to be this broke. And then, in the midst of that, it started getting out of control, and you sound frazzled and overwhelmed.

Here would be my prescription if I were going to write out a prescription for you guys. I want you to not make any more decisions by yourself—not because you’re not capable but because that’s not the correct way to do it. The correct way to do it when you’re married is to be making the decisions together. That will help you with the frazzled. It will also help get him on the same page of realizing how bad you guys have sucked this up. Once the two of you—both smart people making $80,000—look down and go, “We’ve got a $25,000 car that is absolute insanity that needs to be sold.” Yeah, we could take the $3,000 and go get the other one out. That’s fine. I probably would let it go in a lot of cases, but $8,000 when you’re making $80,000 is not much. You ought to be able to knock that puppy out pretty quick. You’re going to have to scrounge some money up to get a car to replace the SUV because it’s going bye-bye.

Once that car is sold and the $8,000 car is paid off, you don’t have much debt. House, and you start saving up for a better car at that point and move back up in car over time. Where this is going is restaurants and not paying attention. You fit the mold exactly. You just fit the case study. That’s bad news, but it’s also great news. In talking to you, you’re articulate and intelligent, and looking at your income also tells me that. You’re just frazzled, and you haven’t been paying attention. Now you got the crap scared out of you with this repo, which is awesome. That repo, when you look back on it, is going to be the best thing that ever happened to you guys because it woke you up. It made you say, “We’re not handling money together. We’re not handling money well. We’ve been buying stuff on impulse all the way down to this car we impulsed because we had a baby.” Boom! We’ve got a mess on our hands.

You’re going to turn this around very quickly. By Christmas, you’re going to be a completely different couple. When I talk to you, you won’t have that frazzle in your voice. You’re going to look at your man differently. He’s going to look at his woman differently. You’re going to be working together and holding hands and making decisions on the money together before the month begins. And you’re going to be debt-free but the house by Christmas.

Yes, I would go get the car out of repo if you’re going to sell the big car and if you’re going to learn to work together on the money and make the money behave. You’ll have to borrow the difference when you sell the SUV. You’ll just go to your local credit union or your local bank and sit down with them. You make great money. You’ll be able to work it out.