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01/31/2012 - 10:15 a.m. CST -- by Dave Ramsey 
Insurance necessities
Dear Dave, I’ve got auto insurance, but can you tell me what other kinds of insurance are good to have? Chris Dear Chris, The purpose of insurance is to transfer risk that you can’t afford to take. Most people can’t afford to have a heart attack and triple bypass surgery. Having to pay for something like that completely out of pocket would bankrupt just about anyone. That’s whyhealth insurance is a vital part of any good financial plan. It’s also important to have auto, which you do, and
homeowner’s insurance, too. If you don’t own a home, make sure you have
renter’s insurance instead. Don’t forget about life insurance, either. If
you’re married or have kids, you should carry eight to 10 times you... |
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01/26/2012 - 10:00 a.m. CST -- by Dave Ramsey
Dear Dave, In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range? Amanda Dear Amanda, Lots of times in a marriage you’ll have a situation where one person wants to save more, while the other is excited to move on toward investing. Technically, neither is wrong. So, the emergency fund really deals with someone’s own personal level of peace. Remember Murphy’s Law, and how it says that says if something can go wrong it will go wrong? Your emergency fund is Murphy Repellant. Some people just want to make sure he doesn’t knock on the door, while others make sure he stays in the next county! There are always practical considerations you can use to determine the amount of your emergency fund. If you both have very stable jobs, you’ll probably be okay saving up three or four months of... |
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09/27/2011 - 9:55 a.m. CST -- by Dave Ramsey
(leasing from your company?) Dear Dave, I know how you feel about leasing a car. But what about the car leasing programs that auto manufacturers offer their employees? Stephanie Dear Stephanie, A few automakers do this kind of thing, but I’d advise investigating the deal very carefully. And it wouldn’t hurt to take a cold shower first – just to make sure you wash off any car fever you may have. Some of the automaker offers are just another way for the company to fleece drivers. But some manufacturers offer their employees programs that aren’t a traditionallease. A few of them offer the use of a high-quality car for very little money per month and no hidden catches. In these cases it can work out pretty well. In some instances you’d lose more in value every... |
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09/14/2011 - 1:18 p.m. CST -- by Dave Ramsey
Dear Dave, We hear all kinds of numbers relating to the economy every night on the news. To be honest, I have no idea what most of them mean. Can you tell me more about the Dow Jones Industrial Average? Ken Dear Ken, The Dow is an index of the stocks of 30 selected companies. We’re talking about outfits like Wal-Mart, Coca-Cola and Nike – some of the big boys. The percentage that the stock prices of these companies rise or fall as a group, on any given day, is the Dow Jones Industrial Average for that day. Technically, this index is not a good representative of what the stock market is doing because it only takes into account 30 companies. The S&P is a much better measure of what the market is doing, because it represents the stock-price activity of 500 companies. Let’s say you’re... |
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09/06/2011 - 10:25 a.m. CST -- by Dave Ramsey
Dear Dave, My mom and dad are terrible with money. They’re getting older, so I’d like to see them start saving something for retirement. How can I teach them your principles? Suzanne Dear Suzanne, I hate to say it, but you probably can’t. My grandmother used to say, “Those convinced against their will are of the same opinion still.” When you start trying to talk to your parents about money, you run into what’s called powdered butt syndrome. Once someone has powdered your behind, they usually don’t want your opinion on money or anything else. Still, as parents get older, especially if you have a particular skill or expertise, they might ask your opinion from time to time. It may be hard for them to take you seriously, though, even if you’re a world-renown expert. To them, you’re alwa... |
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08/30/2011 - 2:23 p.m. CST -- by Dave Ramsey
Dear Dave, I’ve always been intrigued by the restaurant business and wanted to open one of my own. Recently, the opportunity presented itself to open a McDonald’s franchise. I really want to do this, but it would take years for me to save up the money. Is it okay to borrow money to start a business? Jim Dear Jim, It will take longer to save up the money and open the business debt-free, but that’s exactly what you should do. Most small businesses fail within the first five years. One of the main reasons for these failures is the struggle to repay debt. If you’re into restaurants, try starting small with a cateringbusiness out of your home. This will give you a taste of managing your own food service business, and let you know if you really like that kind of work. It will also give you the opportunity to make ... |
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08/24/2011 - 10:59 a.m. CST -- by Dave Ramsey
Dear Dave, I’m saving up money to buy a house in the next couple of years. How should I invest this money before I actually buy something? Candace Dear Candace, The problem is that you’re not really investing; you’re just saving. Investing means you aren’t going to touch the money for five years or more. If you may use the cash to buy something within five years, you’re really just kind of “parking” the money for a little while. If it were me, I’d put it in a money market account. It’s basically just going to sit there and not earn much, but you won’t lose anything, either. If you’re lucky, you might see one percent interest in the short term, but that’s about all you can expect considering the low-interest rate environment we’re in these days. —Dave * For more financial help visit daveramsey.com. |
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08/05/2011 - 12:31 p.m. CST -- by Dave Ramsey
Dear Dave, My wife and I are about to have our first child. She’d like to stay home with the baby after it’s born, so we’ll be losing about half our income. We’ve looked at our budget, and we can stay in the house but things would be very tight. I’ll make $42,000 this year, with a potential bonus of $23,000 at the end of the year. Our house payment is $1,550 a month. Do you think we should downsize to a smaller home and live more comfortably? Mike Dear Mike, I hate it when people have to leave their homes. It can be a hurtful thing to the heart and spirit. If you had $65,000 as a steady income the house payment wouldn’t be a big deal. But you can’t count on a potential bonus, and from your guaranteed income, more than half your take-home pay will be wrapped up in a house payment. You’d... |
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08/01/2011 - 9:25 a.m. CST -- by Dave Ramsey
Dear Dave, Our 15-year-old has saved his money, and he’ll buy a car next year. When he buys it, should the title be put in our names or his? Laura Dear Laura, When my kids hit that age, I put the titles in my name. The insurance will be much less expensive if you do this. Plus, you don’t want a 16-year-old under the illusion that they’re in control of their lives. As their parents, you should love them more than that, because they’re just not ready to be in full control. You want them to be in control of some parts of their lives, so that when they leave they have a clue about life and don’t boomerang on you. But at that age, you should be guiding them, and you don’t need an ownership document to a car confusing them about who’s in charge. I turned the ownership over to my kids when they turned 18. In each case, I knew I could trust them, and they were ready for that level of control. So, onc... |
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07/20/2011 - 11:10 a.m. CST -- by Dave Ramsey
Dear Dave, My husband and I are adopting my nephew. His mom is involved with drugs and alcohol, and his father isn’t in the picture. We’ve got $1,000 in the bank, and we’re in the process of paying off all our debt, except the house. Should we slow down or stop the Baby Steps temporarily, and spend more on family things since my nephew is a teenager? Jocelyn Dear Jocelyn, Hugs are free. Making cookies costs next to nothing, and spending quality time with a young man or woman doesn’t cost a thing. I call that a teenager-friendly environment. I know your heart is in the right place, but I don’t want you to fall into the American trap of thinking he’ll be happy if he has a Wii or you take expensive vacations every year. It sounds to me like he’s coming straight out of a big mess. He wants and needs someone to put their arms around him, tell him he’s a good guy, and teach him how to grow into a strong man. Doing ... |
