money – Hays Post Archive

DAVE SAYS: When you get bad advice, don’t take it

Posted on April 8, 2014

Dear Dave,
I want to roll over a 401(k), and my bank is encouraging me to roll it over to fixed annuities. Is this a good investment?
John

Dear John,
More times than not, when you go to a bank for investment advice, what you’ll get in the bargain is bad advice. And that’s the case here.

I’d move toward a traditional IRA, in a series of good growth stock mutual funds. Put it across four types of accounts: growth, growth and income, aggressive growth and international. What you’re looking for, John, is a great track record for your investments. You want a track record so ridiculously good that it gives you a great sense of comfort, even though there’s no guarantee of what’s to come. And there are mutual funds out there that can do just that for you. I own one that’s over 70 years old, and it has averaged nearly 12 percent over that time.

Lots of people talk in “what ifs” when it comes to investing. Well, you can play that little game all day. But if the economy goes completely down the tubes, and the government destroys things like mutual funds and real estate completely, your little bank-recommended annuity isn’t going to make it, either. The banking system as a whole will fail if all the mutual funds close because they’re all based in publicly traded companies. And that means virtually every business you drive by on your way to work would be out of business. A bank’s not going to survive that kind of thing.

If you’re looking for things to help you survive the apocalypse, you’re talking about food and water. But if you want rational, well-reasoned investments, you need to look at growth stock mutual funds and paid-for real estate. That’s what I do!
—Dave

Dave Ramsey is America’s trusted voice on money and business. He has authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids. It releases on April 22nd. The Dave Ramsey Show is heard by more than 8 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

DAVE SAYS: Letting kids make money mistakes

Posted on February 26, 2014

Dear Dave,
My 6-year old son has saved up $400. He said he wants to buy a motorcycle with it someday, but he recently changed his mind and wants to buy a computer tablet. Is it OK for him to change his mind like this, and how should I handle things?
— Christina

Dear Christina,
I’m not really concerned whether it’s a motorcycle or a tablet, especially if he’s saved his own money. I think the big thing we’re looking for in all this is a teachable moment.
Certainly regret is a concern, especially with a kid so young. But the reality is that neither the decision nor the possible regret afterward will ruin his life. If you talk to him and try to advise him beforehand, and he gets upset later because he feels like he made the wrong choice, it gives you the opportunity to step in and gently say, “I’m sorry you think you made a bad choice, but that’s why I wanted you to really think about it first. You had a chance to listen to mom’s wisdom and didn’t. I’m sorry you feel sad now, but I want you to remember it and learn something from this bad decision.” It’s a process of controlled pain and natural consequences.

One of my daughters did something similar years ago when we went to an amusement park. All the kids had a set amount of money for the day, and we warned them not to spend it too soon. She turned around and blew all her money on carnival games, then she spent the rest of the day whining while her brother and sister rode the rides and had lots of fun. We didn’t give her any more money, but a controlled amount of pain taught her some valuable lessons that day. She learned to listen to her mom and dad, she learned that carnival games are a rip-off, and she learned to control herself a little bit and think things through.

Allowing kids the emotional dignity of making some decisions for themselves is vitally important. You just have to make sure this liberty is supervised and comes with parental warnings and protections. Just because they saved the money doesn’t mean they can do whatever they want. It still has to be used in a way that you, as a parent, are comfortable with and deem appropriate.

There will be some natural tension in the process, but it’s a great way to teach kids about money, decision making, maturity and life choices!

—Dave

Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. His newest book, written with his daughter Rachel Cruze, is titled Smart Money Smart Kids. It will be released April 22nd. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

DAVE SAYS: Using emergency funds

Posted on January 6, 2014

Dear Dave,
My wife and I are working the Baby Steps, and we have our budget in place. Sometimes the budget gets busted because of home improvements and various other things. I think we should take money from our emergency fund when this happens, but she says it should come out of our restaurant and fun money.

What do you think?
Joshua

Dear Joshua,
I hate to break this to you, but overspending is not an emergency. So, I’m siding with your wife on this one. If you budget a set amount in one category and you go over that amount, you’ve got to have something you reduce or cut out completely to stay within your budget for the month.
You’d be surprised at what some people call an “emergency.” But here’s the deal: If something happens on a pretty regular basis, it’s a predictable event. That means you need to budget a larger amount for home improvements or whatever the problem area may be.
Overall, on a month-to-month basis, if you find you have $200 budgeted for car repairs and the repair turns out to be $250, I’d rather you cut back on eating out to make up the difference. That’s the way my wife and I did it back in the day. We never touched the emergency fund for anything except big, unexpected, scary stuff.
—Dave

Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Dave Says: Garnishing while paying

Posted on December 30, 2013

Dear Dave:
My husband and I have about $60,000 in federally insured student loans. Can our wages be garnished if we’re paying less than the actual payment amount? If so, how far behind do we have to be for that to happen?
Jennifer

Dear Jennifer:
To the best of my knowledge there’s no set formula for making this determination. In counseling people, we find some folks who are two years behind making payments before anything is done, while others are flagged at just a couple of months. In reality, they can garnish you immediately if you’re paying less than the agreed-upon amount. But in most cases they won’t mess with you as long as there’s reasonable activity on the account.
The thing most people don’t realize about student loans is that a lawyer doesn’t have to be involved for them to garnish your wages. It’s a lot like the IRS in that they don’t have to sue you in order to take your wages. Congress gave them that power because it’s a federally insured loan. And in my mind, that’s way too much power.
If you’re having trouble making your payments, don’t just throw up your hands and default. Talk to them about a deferral, and keep sending them whatever you can. It’s always better to be proactive than reactive in situations like these. Let them know you want to make good on your obligation, and ask what you can do to make this happen under terms you can afford.
Good luck, Jennifer!
— Dave
Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: “Financial Peace,” “More Than Enough,” “The Total Money Makeover” and “EntreLeadership.” For more, visit daveramsey.com.

Share Your Story for a $50 Holiday Giveaway: The Joan Jerkovich Show

Posted on December 10, 2012

The Holiday Season is a time for reflecting on what we have to be grateful for, but it is also a time for giving to those in need.

Last year, for my Christmas Radio Program, I gave $50 to several of my co-workers to go out in to the community as Secret Santa’s. They were to randomly find someone to give the money to, then come on the air with me to tell their story of giving. They took their roles as “Secret Santa” very seriously.

It was a heartwarming show to hear of the gratitude expressed by the people who received the random gifts, but also for how it touched my co-workers to be able to give.

This year, I am giving my blog followers the chance to be

My “Secret Santa’s”!

The Joan Jerkovich Show is giving away $50 to 3 people in need

Link to the website www.joanjerkovich.com and share your personal story of need, or nominate someone who needs a helping hand during this Holiday. The Show Producers will choose the winners of the giveaway. We will be watching how many Facebook likes, or thumbs up your submission gets in making our decision on who will get the $50 Secret Santa gift. Let’s join together to spread Holiday Cheer to those in need!