Being smart with money doesnít have an age limit
Dear Dave: Iím in my 60s and have lived paycheck to paycheck my entire life. After hearing you, Iím living on a budget, almost have my emergency fund in place and will be ready to start my debt snowball soon. My friends and family think Iím crazy. They say itís too late to make a difference. What should I tell them? — Dale
Dear Dale: You tell them that the only time itís too late to start living on a budget and being smart with your money is when youíre no longer breathing!
I advise everyone — from college students on up — to start saving and paying off debts so they can build wealth later. Live like no one else so that later you can live like no one else. That message goes for you, too!
Right now, youíre in a position to be a huge inspiration to all your friends and a great example for your children and grandchildren. Make this happen, Dale, and you can change your family tree for generations to come. Get that emergency fund built up, and sell things if you have to. Make it fun! Get excited, focused and intense about this and I promise youíll see your financial life get better in a hurry! — Dave
Low-limit credit card
Dear Dave: I filed Chapter 7 bankruptcy a while back. The other day I saw an article in a financial magazine saying the best way to re-establish credit after a bankruptcy is to find a low-limit credit card, make small purchases, then pay it off early each month. Iíd like to buy a home in a few years, so what do you think of this advice? — Kim
Dear Kim: Whoever wrote that article is crazy! Itís just about the worst advice Iíve ever heard. Think about it. When people file bankruptcy they do it because they got so far into debt they couldnít get out. If debt has already pushed you into bankruptcy, donít you think it means debt is something you should avoid? Donít worry about re-establishing your credit. If you go three or four years after bankruptcy without borrowing a dime youíll add no new entries to your credit bureau report.
And this will show a potential mortgage lender that you got the point the first time. It means youíve learned from your mistakes. The definition of insanity is doing the same thing over and over and expecting different results. Getting another credit card after all youíve been through would be insane. You canít borrow your way to wealth, Kim. You need to change the behavior in order to change the results! — Dave
Car or home loan?
Dear Dave: Weíre almost debt-free. The only things hanging over our heads right now are our house payment and a car loan. Would it be a good idea for us to roll the car note into our home loan so that we could deduct it on our income tax? We owe $6,100 on the car, and our household income is about $55,000 per year. — Sylvia
Dear Sylvia: Iíd rather you pay off your debts. Stay focused and knock out these last two big debts. Remember, getting out of debt takes getting mad. Youíve got to get a little righteous anger going and make it a passionate, all-out priority. If you do that with $55,000 worth of income you can make a $6,100 car note disappear in a flash! Besides, in this situation any tax deduction is going be pretty small. — Dave
For more financial advice plus Daveís free ďHow to Get Out of DebtĒ CD, please visit www.davesays.org or call (888) 22-PEACE.