Need some financial advice? Debt and Income Crisis? Pay off the house first? Check cashing? Taxes? Credit Cards? Check out what folks are asking Dave Ramsey.
Dear Dave,
I’m driving a 12-year-old car with 210,000 miles on it. The car needs close to $2,000 in repairs, and it’s worth $5,000. I have $40,000 in cash saved, $40,000 in investments, and I make $80,000 a year. I also have $15,000 in student loan debt, but the only other thing I owe on is my house. Should I pay to repair the car, or buy something else in the $15,000 price range?
Brett
Dear Brett,
Let’s see, if you wrote a $15,000 check for a newer car and wrote a $15,000 check for the student loans, it would leave you with $10,000. I wouldn’t buy a $15,000 car in your situation. I’d buy a $10,000 car. You could probably sell the old one for around $3,000 if it needs repairs, combine that with your money and get a $13,000 car. Then, you could write a check and pay off the student loan debt.
With no car payment, no student loan payment, and a good car, you can really lean into your budget and saving money. You’d have no debt except your home, and you could rebuild your savings in a hurry. You’d be in really good financial shape in about six months. Plus, you’d have $15,000 in the bank in the meantime!
—Dave
Sell personal car to help pay business debt?
Dear Dave,
My husband started his own one-man, small business as a handyman a little less than a year ago. He has netted $17,000 in that time, but the business has about $13,000 worth of debt. We’ve always kept personal finances and business separate, but what would you think about us selling one of our paid-for cars to help with the business debt?
Robin
Dear Robin,
There’s nothing wrong with small beginnings. On top of that, you should always keep your business and personal finances separate. Aside from the debt, it sounds like he’s off to a good start.
I think you’ll be able to pay off the debt from your future income. If your husband started his business less than a year ago, he has spent that time trying to get things off the ground and working with very little name recognition. If he’s good at what he does, and he continues to work hard and market himself properly, he should be able to double what he made in the last year.
To do that, however, he’s going to have to spend some time in accountant mode. He needs to figure out the types of jobs he makes the most money on for the time he puts into them. I know a guy in our area who made more than $100,000 as a handyman in the last year. I’m talking about $100,000 in profit! His prices are higher than most in that line of work, but he’s the best. He provides superb quality work, and he’s always polite, on time, and on schedule.
If your husband does the research and crunches some numbers, I think he can dial it in and make a lot more money than he’s making now. Find that sweet spot, and he’ll continue to grow the business!
—Dave
