Dear Dave,
My wife and I are in our late-twenties, and we have a full emergency fund saved up. Our only debt is our home. We have talked about having a child sometime next year, but I am on the road three weeksamonthformy job. I don’t want to be gonesomuchoncewe haveachild,andIam thinking about opening my own business, so I can eliminate the travel and control my hours better. Do you haveanythoughtson this situation?
Mike Dear Mike, An entrepreneur is the person I know who can go from sheer terror to sheer exhilaration and back every few hours. You’ve got to have a strong mind and a strong heart to be successful, plus there’s a good chance your idea won’t last long if you don’t love what you’re doing. Remember, too, you’re basically on straight commission as an entrepreneur, and there probably wouldn’t be a regular paycheck you could count on for a while. Okay, that was a quick dose of reality. Now, if time and money weren’t considerations, what would you rather do—stay at your current job or run your own business?
My advice to anyone, entrepreneur or not, is to make sure your work falls in line with the passions, skills and talents you were born with. You don’t need to work in the construction business if you don’t like being outdoors and working with your hands, just like you don’t want to be stuck in a call center if you hate talking on the phone and being cooped up inside all day.
Everyone wants to be successful in their job, enjoy what they do and make lots of money. But personalhappinessis just as important. If you wake up excited about what you’re facing every day, chances are you’ll be successful and happy. If you wake up dreading the day and your job, I can almost guarantee you won’t be successful or happy.
You’ve got a lot more thinking and research to do, Mike. There’s nothing wrong with wanting to change jobs or be an entrepreneur. Being able to spend more time with your family is a noble and worthwhile thing, too. But I’m not hearing a lot of direction in what you’re saying right now. Maybe work with a career coach, and spend some time tossing ideas around with your wife. I know you both want great things for your child, but you’re not going to make the best possible decisions for yourself—and your family—without a lot more planning and thoughtful discussion.
— Dave Dear Dave, We are ready to start Baby Step 2, and we have about $35,000 in total debt. Our two smallest debts, a credit card and a truck we financed, are both $4,500 right now, and we have a combined incomeofabout $95,000 a year. Since the credit card has a higher interest rate, my wife thinks we should pay it off first. To me, the truck is a necessity, and we should pay it off first for that reason. What do you say?
Grant Dear Grant,
When the rule of paying off debts from smallest to largest doesn’t apply, I think you should attack the one with the larger interest rate first. In your case, that’d be the credit card debt. I get what you’re saying about the truck. And I agree that transportation is a necessity. You guys might be in a bind if something happened and you lost a vehicle, but it’s also a situation you could probably work around for a little while if you had no choice. My guess is you have friends or relatives who could loan you a car in a pinch, and public transportation is an option for some folks. So yeah, knock out the credit card first, then move on to the truck.
Do you understand my reasoning, Grant? Going this route serves two purposes: First, it will save you a little money. And second, I’ve got a feeling it will fire up your wife, and get her on board with the idea of you two getting yourfinancesinorder even more than she already is.
She’s taking this whole thing pretty seriously if she’s eyeballing interest rates, buddy. She loves the thought of you two having control of your money. Use this momentum to work together as a team, and knock out that debt!
— Dave Dear Dave, My wife and I just bought a new home, and we only need one or two more things to furnish the living room. Over the weekend, wefoundacouch and love seat set we both like for $3,000. The owner of the store said he would take 15% off the price if we get a store credit card and pay for it that way. We are in pretty good financial shape, and can afford to pay cash for the furniture, but what do you think about the idea of taking advantageofthe15% off offer, then paying off the card immediately and closing the account?
Jackson Dear Jackson,
Playing with snakes is always a bad idea. Sooner or later, you’re going to get bitten. Everyone thinks they’re the exception to the rule, or they’re somehow winning or getting rich by doing stuff like this. It doesn’t work that way. So, stop playing around with debt products. This guy’s just trying to hook you and make more money.
Your idea might sound good on the surface to a lot of folks, but the problem is the vast majority of those same people don’t have the discipline to follow through on a plan like this. Having that store account, even for a short period of time, would be too much of a temptation. Another issue is many places like this hit you with a fee when you pay off the card. They’ll fee you to death on other things, too, if you’re not careful, until you end up wishing you’d never even seen the place.
If it were me, I’d just talk to the owner again and let him know I’m taking my business elsewhere unless he discounts the furniture 15% on a cash purchase. There’s no way I’d take out a stupid credit card for a place like that whether I had the cash on hand or not!
— Dave