Dave says

Dear Dave,

My car was declared totaled because of hail damage, and my insurance company says I have two options. One is to take a higher total loss settlement check of $19,000 and use it toward the purchase of another car. The insurance company would then take possession of the car. The other option is to accept a check for $13,000 and have the car on a salvage title. The car is worth $15,000, and I have 20% car replacement assistance on my policy that increases the total loss settlement to the $19,000 amount I mentioned earlier. I’m on Baby Step 3 of your plan, and I owe nothing on the car. What should I do?

— Meagan Dear Meagan,

Take the bigger check! That’s a quick and easy decision, but give me a minute to explain why. It’s not about being greedy—it’s a little more complicated than that.

If you had $19,000 in your pocket, would you go buy a $6,000 hail-damaged, salvage-title vehicle for everyday driving? Of course, you wouldn’t do that! The insurance company is probably hoping you’ll overlook the $19,000 offer and essentially pay $6,000 for this beat-up car. No. Thank. You. I’ll pass on that deal.

With $19,000, you’ll have plenty of cash to rent a car for a couple of weeks and take time to find a great-quality used car at a good price. You might even be able to negotiate with the insurance company to give you a little time to look for another ride before they come pick up the old one.

But no, you don’t want that messed up, old car. Why would you? That thing probably looks like a kid with a badcaseofacnerightnow.Go find yourself a nice car, hon. There are plenty of affordable, slightly used vehicles on the market right now. There’s no reason for you to drive around in something that’s all beat up if you don’t have to.

Best of luck, Meagan!

— Dave Dear Dave,

My wife and I have been very fortunate in our careers. We both have six-figure incomes, and as a result we have a little over $2 million in savings and investments. With this in mind, do you have any advice on how to make sure your kids aren’t spoiled as they grow up in a family that’s doing well financially?

Gary Dear Gary,

First, don’t spoil them! Teach them to work, and teach them to be givers. Oh, and gently remind them every so often that it’s you and your wife who are wealthy— not them. Yeah, I know. This probably sounds mean to some folks, but I’m talking about simply explaining to them how you and their momhaveworkedhard,been smart with your money, and that’s why you’re in the position you’re in.

We taught all our kids, from a very young age, just how important it is to work. Work equals money. When you do that, and kids see it in their parents’ attitudes and actions, it makes a big impression. With little kids, itcanstartwithsimplethings like cleaning up their rooms or clearing the table after dinner. And it should carry over into their teenage years, as well. Every able-bodied child should be working and earning money, whether it’s their own entrepreneurial idea, at a fast food joint or babysitting.

Another thing we did was based in our faith. As Christians, we taught our kids that we don’t really own anything. It all belongs to God, and one ofourjobsistowiselymanage the things He entrusts to us. The first rule is to take care of your own household—the important stuff. After that, it’s okay to have some nice things, but it’s not all about fun. It’s also about thoughtful giving and being generous.

As a parent, your job isn’t to be a buddy to your kids. It’s not to give them every little thing they want, and make sure they’re running around carefree and playing every hour of the day. Your job is to teach them about the important things in life, and over time, mold them into mature, responsible human beingswhocansurvive—and succeed—in the real world.

— Dave Dear Dave,

I’m single, and I make $35,000ayear.Nextyear,my salary and bonuses should be around $50,000. I have a little over $30,000 in debt right now, including student loans, and I’m not sure how I’ll be able to keep up with bills and everything else right now if I have to save $1,000 for a starter emergency fund like you recommend. Can I get by with a starter emergency fund of $500?

Jonas Dear Jonas,

I really think you’re making this whole thing sound a lot harder than it really is. Theykeyismakingandliving on a budget, and that’s not rocket science. It’s a simple, written planning process where you give a name and a job to every dollar you make before the month begins.

Food, shelter, clothing, transportation and utilities are necessities, so they come first. After that, make sure you’re current on your debts. Once all that is out of the way, puteverysparedollaryoucan into your emergency fund. If you do this with a sense of urgency, and limit spending to necessities, you’ll be surprised by how fast it will happen. And you’ll love the newfound sense of security.

The truth is you really need a starter emergency fund of $1,000 if you’re at a point in life where student loans and other debts are in the picture. That may seem like an impossible goal right now, but it should be your first priority. And a written, monthly budget will go a long way toward helping you achieve that goal.

You can do this, Jonas!