Don’t jeopardize your marriage with co-signing!

 

 

 

Dear Dave,

We’ve been getting on track financially using your plan, but now my husband’s parents wants us to co-sign on a new car. I think it’s a bad idea, and have asked him to not do this. We’re just on Baby Step 2, so any catastrophe would really set us back. What if my husband does this anyway? Do you have any tips on grace, or what do besides the “I told you so” lecture?

- Genevieve

Dear Genevieve,

You’re right about one thing. Co-signing for that car would be a very bad idea.

But I’m not sure this is the time for grace and understanding. I think this is one of those times when you stand in the driveway, and don’t let him leave. Just tell him no! I understand that we’re talking about family, and that makes it more difficult for him. But this guy needs to understand that he’s putting your relationship in jeopardy if he completely goes against your wishes on something that you are adamantly against.

I’m serious about this. If the deal falls through, and there’s a pretty good chance it will, it’s not going to be just a setback or inconvenience for you guys. This kind of thing could potentially bankrupt your family. It could also cause big-time problems between your husband and his parents.

Do you know why banks want co-signers? It’s because they don’t think the people who want the loan will pay the bill! You’re basically being asked to stick your head in the noose so the bank can hang you when they don’t pay up!

Don’t do it, Genevieve. Don’t you ever co-sign for anyone, and don’t let this happen. In the Contemporary English Version of Scripture Proverbs 17:18 reads, “It’s stupid to guarantee someone else’s loan.” That’s not me speaking. That’s God’s word!

- Dave

What do you look for in a bank?

Dear Dave,

I’m shopping around for a new bank, because my current big bank has gone fee-crazy. They want $15 to tell me my mortgage payoff amount. Besides asking about fees, do you have any other advice when it comes to looking for a good bank?

- Jim

Dear Jim,

I learned to stay away from the mega-banks a long time ago. It seems to me that somewhere along the line they forgot how to treat their customers like human beings.

That’s why I stick with community and regional banks. I love local credit unions, too. These are the kinds of places where you can go in and talk to the branch manager if they go fee-crazy. They have the power to waive fees, or fix situations if something gets out of whack or is just plain stupid!

- Dave

Can't pay for her wedding

 

 

 

Dear Dave,

Our daughter is 24, engaged to be married, and we can’t afford to pay for the kind of wedding she wants. My husband and I have had some financial difficulty over the last few years, and we are finally beginning to slowly dig our way out. On top of this, we’re still paying on her student loan from college. Should we let her know the situation up front, and how can we keep from feeling guilty about things?

- Gina

Dear Gina,

The big thing is that first you and your husband should be on the same page. You need to come to a decision about exactly what you’re willing and able to do. It doesn’t sound like it will be much, though. Especially if you’re trying to get your own finances in order and still paying on her student loan.

Now, how do you not feel guilty about all this? I think that’s a personal journey you’ll both have to take. A wedding is a wonderful thing, but it’s not any less wonderful when it doesn’t cost an arm and a leg. It also doesn’t make you child abusers or bad parents just because you’re not willing to go $20,000 into debt to throw a fancy wedding!

I think, too, that you owe this kid some straightforward and honest communication. Most 24-year-olds don’t have a firm grasp on reality. Even at that age, they don’t think about where the money’s coming from. They’re just bopping along and assuming Mom and Dad will pull thousands of dollars out of the air for a big Barbie and Ken wedding. She needs to know that things just aren’t like that in the real world.

Let her know that you love her and want to help, but you’re going to be very limited on what you can do financially. Besides, you can have a great wedding without throwing around lots of cash. A marriage is about love, not dollar signs. And when it comes to the money, a wedding is like anything else you’d buy. My rule of thumb is pay cash or don’t do it!

- Dave

Drop coverage?

Dear Dave,

I recently heard someone on television say it was a good idea to cancel the collision and comprehensive portions of your auto insurance coverage if you want to save money. What do you think about this? My husband and I are trying to follow your plan. We have $1,000 in our emergency fund, and we drive a couple of old, used cars. Would this idea work for us?

- Anonymous

Dear Anonymous,

Obviously you’ll save money if you’re not paying out as much to the insurance company. But I don’t think dropping that coverage is a good idea. Let’s say you don’t have much money saved up, and then you total your car. How’re you going to get to work or to the grocery store? It would leave you in a bad situation, wouldn’t it?

If you’re driving a couple of beaters, the insurance doesn’t cost that much. Cheap cars mean cheap insurance. Self-insuring is a good idea sometimes with some things, but I don’t believe in it when you’re talking about your cars and you’re broke! In my case, I’ve got enough money to just write a check and buy another car if something happens to mine. But when I added up what the car costs versus what they charge me for insurance, it looks like a decent deal to me. I’m just not willing to take the risk with that much money.

The purpose of insurance is to protect you from risks that you are unwilling or unable to take yourself. That’s why I still have full coverage on my car. The cost benefit analysis told me it was a good idea. I suggest you keep it, too!

- Dave

 

 

For more financial help, please visit daveramsey.com.