News from the Tennessee Valley Columnists
MONDAY, JULY 23, 2007

Dave Ramsey

How to deal with creditor insisting for payment over phone

Dear Dave: I sent in my final two car payments totaling $400 to pay off my car. I had gotten behind, and they had been calling me about the debt. They continued calling even after I’d sent in the payments, and a guy finally told me they had changed their mailing address and I’d sent the money to the wrong place. Then, he got nasty and started demanding that I make the payment over the phone. He wouldn’t even give me the correct address. What can I do? — Jean

Dear Jean: Never, ever make any kind of transaction like that over the phone with a creditor. Call the bank right now, and put a stop payment on the check you sent to the wrong address. Next, you need to call these people back and flat out ask for the correct address to send your payment. Chances are you won’t get the same guy, but if you do just hang up on him and call again. You’re trying to make things right, and all you need at this point is information. You don’t have to put up with being verbally abused by this jerk.

Take charge of the situation, Jean. If the phone jockeys continue to harass you, demand to speak to a supervisor and let him or her know that you’re willing to overnight a check to them, but there’s no way you’re giving someone who has been rude, obnoxious and unprofessional electronic access to your checking account! — Dave

Maximum mortgage

Dear Dave: My husband and I disagree over the maximum amount of our take-home pay that should go toward our house payment. What do you think? — C.R.

Dear C.R.: You can qualify for a low-side ratio of about 28 percent of your gross monthly pay. That’s what you make before taxes. But you should never take out a mortgage with a monthly payment anywhere near that large. If you’re wise your payments won’t be more than 25 percent of your net, or take-home pay. And the reason is simple. If you keep your mortgage payments at a fourth of your take-home pay, it’s lots easier to stay out of debt in other areas and save money.

Smart question, C.R.! — Dave

Online trading

Dear Dave: How do you feel about online trading for building a stock portfolio? Assuming that someone has done their homework on which stocks to buy, is there anything else to know about do-it-yourself trading? — Kevin

Dear Kevin: There’s one very important thing to know — don’t do it! This kind of thing is just one rung below day trading on the ladder of stupidity.

Here’s the problem. When most people talk about “doing their homework” on single stocks, they’re just barely skimming the surface. And most of the time this involves just talking to their broke friends. There’s no way you and your golfing buddy are going to dig up and decipher the kind of solid, reliable information you’ll need to be successful at this kind of thing. I’d much rather go with a mutual fund that’s spent millions of dollars analyzing companies and doing real research. What you’re talking about is a million times riskier than using good growth stock mutual funds — selected by professionals — with 90 to 100 different stocks. I don’t own one single stock, Kevin. And you shouldn’t either! — Dave

Visit or call (888) 22-PEACE for advice.

Dave Ramsey Dave Ramsey
DAILY Columnist

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