Dear Dave,
My wife has run her own small business for the last three years. I try to be positive, andhelpwheneverIcan, but the truth is things aren’t going very well. In fact, the business has never really shown signs of getting off the ground. Over the last several months, we’ve been putting part of what I make at my job into the business to help keep it open. We’ve also taken money out of savings to bolster things, and now our savings account is pretty low. Iwanttosupporther,because she loves what she’s doing. But we have three kids, and I make about $60,000 a year. Thingshavebeenprettytight financially for a while. What do you think we should do?
Isaac Dear Isaac,
I’m an entrepreneur and business owner. So, trust me, I totally understand the excitement and allure that goes along with having your own business. But your own household and its immediate financial responsibilities should come first.
Here’s the thing. If you’re putting other money into a business account, that’s a decentsignyou’renotmaking money in the business. The only money that should go into the business account is income the business creates. So, at this point, I think you andyourwifeneedtositdown together, and have a serious, but gentle, talk about things.
Set aside time—together— and complete a written profit and loss statement on her business. While you’re at it, you also need to make a written household budget. The numbers won’t lie, and it’s going to be your job to be loving and understanding during all this. But the main thing you folks need is to get on the same page financially before the situation gets any worse.
Again, when it comes to the business, put all her expenses on the profit and loss statement in detail. Then, write out what it would take for her to break even each month. I hate that things have turned out this way, Isaac. But with everything that’s been going on in your finances, if she’s not, at a bare minimum, breaking even at this point, then I’m afraid it’s time for her to do something else.
— Dave Dear Dave,
I’m a sophomore in college studying agriculture business. Igrewuponafarm,and recently I decided it’s time to sell a small cattle herd my dad helped me start growing when I was a kid. I don’t have any student loan debt, and I’m paying for school with lots of scholarships and some help from my parents. I can sell the herd for about $20,000,andIwaswondering how you think I should invest that money for the future.
Colby Dear Colby,
You know what? I think the best investment Colby can make right now is in Colby. By that, I mean I want you to finish your degree debt-free more than I want you to become a professional investor.
If I were in your shoes, I’d park the proceeds from your cattle sale in a high-yield savings account. Think of it as an insurance policy that will enable you to finish up school without taking out a bunch of student loans. I know that doesn’t sound as glamorous as investing, but think about this: Even though that $20,000 might not grow a ton in two or three years, it will grow. And if you don’t need it for school, it’ll be sitting there waiting for you when you’re ready to set up house and start your new life after graduation.
Colby, in your case, finishing school and getting a valuable degree — one you can actually use to make a future for yourself — is going to give you a better mathematical return than a mutual fund. Why? Because you are a better investment than a mutual fund. Literally. I’m not talking about just in a philosophical or spiritual sense, but financially. What you’ll be able to do with your life and the money you’ll make in the process is a great returnonyourhardworkand tuition dollars.
I can tell you grew up on a farm, young man. You’re definitely no stranger to real work, planning ahead and thinking about the future. I’m proud of you, buddy!
— Dave Dear Dave,
How do you feel about the leasingprogramsautomotive manufacturers offer their employees? I’ve listened to your show enough to know you don’t recommend leasing the traditional way through a dealership.
Baker Dear Baker, I’d advise investigating the details of any deal like this very carefully. Some manufacturer offers, even ones to employees, are nothing more than another way for the company to fleece more drivers. But some manufacturers offer their employees decent programs that aren’t a traditional lease. I assume this is the kind of deal you’re talking about.
A few of them offer the use of a newer, high-quality car for very little money per month, with no hidden catches. In cases like these, things can work out pretty well for the employee and the company. I’ve even heard of a few companies offering gas and more in these employee deals.
Now, you’re right. I don’t recommend leasing in a normal scenario. For the average buyer walking onto a car lot, leasing is a complete rip-off. I tend to call it “fleecing” because getting “fleeced” means getting taken advantage of financially. And that’s exactly whathappenswithconsumer auto leases. Basically, a car lease is a contract where, instead of buying a car, you pay in monthly installments to drive it for a set amount of time—usually two to three years. It’s basically a glorified rental car. But unlike a rental, leasing is a form of debt. And on top of all that, leasing is also the overall most expensive way to own a car.
Again, just make sure you check all the details very thoroughly, Baker. Use your head and a calculator, not your heart, when making a decision on something like this.
— Dave Dear Dave, I’m 26, so I haven’t had time to accumulate a lot of moneyyetthroughmycareer. I do have a good, full-time job, though,andhavestartedsaving money. Do I need a will or trust when I’m so young and have so little in terms of assets?
Alisha Dear Alisha,
I love the fact that you’re alreadythinkingaboutthings like this. You’re a wise young lady.
Considering that you’re young and just starting out, you don’t need anything complicated in place. Trusts tend to be geared toward people with complex estates, so it doesn’t sound like that’s something you need to worry about. But you do need a simple, inexpensive will.
You didn’t give many details, so let’s say you have a car, along with the money in the bank you mentioned, plus a few belongings. With a basic will, it’ll be no problem to work through your estate and follow your directives if something unfortunate should happen. Here’s something else to think about, too. Anotherimportantdocument you’ll want in your will package is a healthcare power of attorney directive. This includes things like who’s
Dave Ramsey is a seventime #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, buildwealthandenhancetheir lives. He also serves as CEO for Ramsey Solutions.
going to make medical decisions for you if you’re unable to make them yourself. As a part of this, you’d also want to fill out the paperwork on whether to disconnect life support systems in the event you’re in a coma.
All this stuff’s a real wakeup call, right? I know these kinds of things aren’t fun to think about—especially at your age. But thinking about them, and doing something about them, is the right thing to do. It’s the smart thing to do. Plus, it will take a huge burden off your loved ones. And all this becomes even more important if you have children, because the state will step in and decide what happens to them if you don’t.
Having these things laid out ahead of time, and sharing them with your family and close friends, would be a very thoughtful and mature thing to do, Alisha. Think about it. They’re already going to be grieving and distraught if something happens to you. You don’t want to make things harder by leaving a lot of important and difficult decisions for them to make in the middle of it all.
— Dave