9/26/2005

Advice from Nashville's leading Financial Aid Advisor Dave Ramsey

 
Dave Says
By Dave Ramsey
Author of:
Financial Peace and
The Total Money Makeover

"Balance savings and spending!"


Dear Dave,

My husband says he doesn’t want to work all the time and not have anything nice. I think we should save money and pay cash for things, but he’s always going out and making expensive purchases on credit. He’s pushing us further and further into debt, and I don’t know what to do.

Sandra


Dear Sandra,

It sounds like your husband has gotten into the old mentality some folks have where they think the only way they’ll ever have anything in their lives is by going into debt. It’s an old song and dance that sounds like this: The only way I’ll have a decent car is to have a car payment … that’s just the way it is, a poor man can’t make it … only rich people can have anything nice, and all this other garbage. That whole way of thinking makes me want to punch somebody.

I’ve been broke twice in my life, and I’ve been a millionaire twice in my life before the age of 40. I’m nothing extra-special, just a little bald-headed guy who wouldn’t quit and refused to accept that way of thinking. If you work, work, work, the last thing you want is to be in debt to the banker and have big payments hanging over your head.

See if this little piece of information will get his attention. If he were to cut back just a little and make more conservative purchases, you’d probably have enough money to invest the equivalent of a car payment each month. The average car payment in North America is $378 over 55 months. If you were to invest this from age 25 to age 65 you’d have $4.4 million! Not exactly poor man money, is it?

You’ve got several issues on the table, Sandra, and they’re all very serious. One is that your husband is willing to make major, life-changing decisions without accepting your input. I’m a pretty opinionated guy, but I don’t make major financial decisions that affect my family without my wife’s agreement. This isn’t because I can’t make decisions on my own or that I’m henpecked. It’s just common courtesy and respect to hear her insight on the matter. If she and I don’t come to an agreement on these things, then the deal’s dead and that works both ways. It’s just part of a good marriage. If your husband says he wants to buy a new car, and you don’t think it’s a good idea but he does it anyway – that’s wrong.

The second major issue is his mentality that the best way to be prosperous or appear prosperous is by going into debt. The paradox is that it’s exactly the opposite that causes you to be prosperous. When you get rid of payments you have the largest wealth-building tool in your life available to you – your income. When all the money comes in and all the money goes out, there’s nothing to invest or save or buy nice things with. But it’s easy to do all these things when you don’t have any payments.

- Dave

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