Keep Working?
Dear Dave,
My wife has been working at the same company for the last 20 years. She makes $40,000 a year, and she can retire in nine years with full benefits. This may sound crazy, but we’re wondering if it would be a good idea for her to quit now and stay at home with our two toddlers. We’re debt-free, and we could save some money and pay the bills on my income. Is this a bad idea?
Sam
Dear Sam,
Is mom staying home with the kids a bad idea? I don’t think so! Go ask those kids which they’d like best – benefits or having mommy around a lot more – and see what they have to say. You already know the answer to that one, don’t you?
We don’t work for retirement and benefits. We work for what benefits and retirement DO for us. Benefits can help us take care of our families, and one of those benefits is that we can make and save money. Even if she quits, you guys can still do that.
There are all kinds of great work benefits out there, Sam. But if you really want to see some benefits, pour as much time as you can into your kids!
Dave
Help From Dad?
Dear Dave,
My husband works very hard, and he makes $25,000 a year. We’ve got $21,000 in credit card debt, plus ongoing medical bills for our special needs child. Right now, we’re living in an old trailer. My father told us he’s willing to help us pay down some of the debt and get us moved into a house if we’ll attend financial counseling. Do you have any better ideas?
Cheryl
Dear Cheryl,
If the money is going to be loan – in other words, if you’re going to have to make payments to your dad – I wouldn’t do it. The borrower is always slave to the lender, even when it’s your parents. If you want family events to feel really strange, have debt to your parents. It twists you up inside, and since it’s YOUR dad we’re talking about, the whole situation will be especially tough on your husband.
Now, if this is going to be a gift with no expectation of re-payment, that’s a little bit different. But I think your dad is right on target with making the money contingent on you guys getting some financial counseling. If you were my child, I’d definitely expect that much AND for you guys to start saving money for the future. That’s only fair.
You two obviously aren’t spoiled little brats running around spending money like there’s no tomorrow. But having a family and raising kids on $25,000 a year would be hard on anyone – even without the credit card and medical bills.
I’d also suggest that your husband map out a plan for improving his earning potential. It would be great if the two of you could sit down together and do this. Give him some support and boost his confidence. Let him know he’s smart, talented and can be anything he wants to be. Help him decide what he wants to be doing three of four years from now and the steps he can take to make it happen.
He’s a hard-working man, Cheryl. But today’s culture doesn’t always reward just hard work. We’re in a knowledge-based economy right now, one where you need to put the brain in gear on a regular basis to really get things done.
Always remember: You make more money when you PLAN to make more money!
Dave
Crisis Looming
Dear Dave,
I lost my job a few months ago. My wife works, but she doesn’t make much money, and we also have three kids. I’m still trying to keep up my credit card payments, but next month I know I’ll be late and they’ll start adding fees. In all, I have about $60,000 in debt and that includes payments on a $20,000 car. I don’t know how to handle the situation anymore.
Geraldo
Dear Geraldo,
The first thing you need to do is sell that car. You can’t afford a $20,000 car when you’re $60,000 in debt. And really, the credit cards are the least of your worries. What you need is an overall game plan. You don’t have a debt crisis as much as you have a career crisis.
You need to be delivering pizzas or throwing boxes at UPS tonight! You’ve got to do something to get some money going, even if it’s not on the level of what you were doing before. A thousand or $1,200 a month doesn’t sound like a lot, but it’ll go a long way in keeping the wolf away from the door.
And when you’re not working, you need to be pounding the pavement looking for a real job. With a wife and family, you’ve got some big responsibilities, man. There are good jobs out there, but you’ve got to get out and make it happen.
What you’ve been doing is honorable, but right now the credit card companies can wait. They’ll fuss and threaten, but your family needs to come first. Take care of the basics before anything else – food, clothing, shelter, transportation and utilities.
Then, you can take care of the credit sharks with whatever is left!
Dave
Trailer a Bad Idea!
Dear Dave,
My little brother is getting married soon. Together, he and his wife will make about $35,000 a year. The other day he told me he’s working on a deal to buy a $70,000 trailer, and has already put $500 toward the purchase. The deal isn’t final yet, so what can I do to convince him this is a bad idea?
Doug
Dear Doug,
Go knock him in the head and stop him!
Seriously, take this kid on a ride around town and let him have a good look at the trailers people bought in the last few years. You can practically see the money draining out of them.
A trailer is just about the largest purchase you can make that will go down in value. It’s like a car you sleep in! If you bought a $70,000 trailer three years ago, it would be worth about $30,000 now. That’s not what I call a wise investment.
If it were my little brother and I had the money, I’d pay him $500 just to walk away from the deal. He’s looking at the trailer like it’s a dinky little house, but here’s the difference. If he buys a small $70,000 home, at least the thing is going to go up in value.
I’m not badmouthing people who live in trailers here, Doug. I’m badmouthing trailers. Call them trailers, mobile homes – whatever. They’re a bad place to stick your money!
Dave
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DAVE RAMSEY SAYS