Need some financial advice? Debt and income crisis? Pay off the house mortgage first? Check cashing? Taxes? Credit Cards? Check out what folks are asking Dave Ramsey.
Dealing with debt collectors
Dear Dave,
Do you have suggestions on how to interact with debt collectors? Sometimes they are reasonable and easy to work with, but others are rude and pushy. Your advice would be appreciated.
Paul
Dear Paul,
You’ll run into all sorts of collectors, no matter what kind of debt you have. Occasionally they are friendly and understanding, while others can be downright mean and nasty. Whatever their approach is, you have to keep in mind they’re all after one thing—your money.
Most debt collectors prey on a person’s emotions and lack of confidence. If you don’t know your rights, they can scare you by using bogus threats. Understand what I’m saying here, Paul. If you have debt, you have a legal and moral obligation to pay it. At the same time, you need to calmly and confidently control these kinds of conversations. You might have made some financial mistakes, but that doesn’t mean you should allow someone to abuse you.
When it comes to dealing with debt collectors, keep track of all the calls and emails. Write down the names of anyone you talk to and when they called. A record of all contact is important, and it will make it easier to report them if they violate the federal Fair Debt Collection Practices Act. If the collector agrees to settle the debt, get it in writing and keep the document as proof in case they “forget” they made the offer.
Also, be completely up to speed on your accounts. Know what you owe, who you owe, and have a record of all the payments you’ve made. Knowing the facts gives you the upper hand in any situation. Don’t be intimidated by debt collectors, either. Calmly explain your situation, the reason you’re behind on the debt, and how you plan to pay it off. Don’t get emotional and let yourself get drawn into an argument or shouting match. If they insult you, or yell or curse at you—yes, this happens sometimes—hang up immediately.
Financial troubles like debt can make every aspect of your life feel messed up. If you want to get back on track, start living on a written, monthly budget, and attack your debts using the debt snowball system. It’s not easy, and it takes discipline, hard work, and sacrifices, but it’s worth it!
—Dave
READ: Dave Says – Push the pause button
Relationships and giving
Dear Dave,
Do you have guidelines for giving when it comes to helping family members? My wife and I are both 52, we’re debt-free, and we have savings along with about $750,000 in retirement. We agree with you that it’s a bad idea to loan money to relatives, but we were hoping you could give us a little extra guidance.
Samuel
Dear Samuel,
I love that you have a helping and generous heart toward your family. Wanting to help is a noble and caring thing. Wanting to help in the best way possible for all concerned in a sign of maturity and wisdom.
The big thing is to make sure you’re helping someone get back on their feet, and make positive changes in their life. You’re not helping anyone when you give a drunk a drink, so you have to ask yourself if your generosity is really helping them or if you’re just enabling bad behavior. Also, you can’t give to a point where you’re putting your own household at risk. You have to continue to be responsible with your finances where your own family is concerned, as well.
This isn’t about being a control freak, Samuel. It’s about using the resources God has given you in a wise and responsible manner. In human terms, that means helping someone get out of a mess they’re in, while at the same time ensuring they’re working to make sure they never end up there again!
—Dave
Saving for a car
Dear Dave,
I decided a couple of years ago to start following your plan. Part of getting out of debt for me included paying off my car. I’m taking your advice, and saving up to pay cash for my next vehicle. I know you like mutual funds, so should I put the money I’m setting aside for that purchase in a mutual fund?
Dear Corey,
I’m glad to hear you’ve decided to get control of your money. Mutual funds are great for long-term investing, and by long-term investing I’m talking about a bare minimum of five years—preferably 10. But I wouldn’t recommend them as a way of saving up for a vehicle purchase. The problem with mutual funds, in the type of short-term scenario you’re talking about, is they can go up, or down, in value.
I’d suggest a simple savings or money market account when it comes to stashing the money you’re saving for a newer car. They don’t pay much in terms of interest, but your money will be safe, and you won’t have the ups and downs of the stock market to worry about.
Did you know the average monthly payment in America for a new car right now about $554 a month? It makes my head hurt to think about that much cash flying out the window every month on something that’s dropping in value like a rock. Even if you just stashed that kind of money in a shoebox you’d have over $6,600 saved in just a year. And despite what some people say, that’s enough to buy a dependable, pre-owned car.
Stick with the plan, Corey!
—Dave
