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.
Push the pause button
Dear Dave,
I’ve been following your plan, but recently I experienced a medical emergency. I’m about halfway through Baby Step 2 and paying off my debts using the debt snowball system. Considering the circumstances, should I stop doing the debt snowball for now?
Brooke
Dear Brooke,
That’s exactly what you should do. But make sure you’re only pressing the pause button on paying off debt. I’m talking about temporarily stopping the debt snowball, and making only minimum payments on all non-mortgage debt for now.
Cash is your umbrella when it rains, and you never know just long the rain will last. Even if you have great health insurance, you might end up paying a chunk out of pocket. That’s why it’s important to save up and have plenty on hand.
Things like this are often just a bump in the road, so don’t get discouraged. They can be expensive, and they’re part of life, but taking care of these kinds of issues doesn’t have to mean giving up on getting control of your finances. Emergency issues, especially a medical emergency, come first. Then, go back when things are better and pick up where you left off knocking out debt using the debt snowball system.
You can do this, Brooke. God bless you!
—Dave
READ: Dave Says – This lady’s getting it done!
You’re just not ready
Dear Dave,
My husband and I just bought a small business with cash. My sister let us live with her while we saved up the money for it, but things are starting to get a little cramped for everyone. The other day, my sister offered to co-sign on a house for us. Do you think this is a good idea?
Cari
Dear Cari,
Ok, so you just bought a business. I love your entrepreneurial spirit and the fact you saved up and paid for it with cash. But at this point, you don’t know if the business is going to be successful or not. On top of that, you told me you’d need a co-signer for a home. If you need a co-signer for anything, it means you’re not financially ready for that purchase.
I know you don’t want to hear this, but you guys need to just forget about buying a house for a while. If I were in your shoes, I’d find a decent, inexpensive place to rent, and spend two or three years getting the business up and running. Pay off any debt you have, while saving as much money as you can in the process.
I want you and your husband to have a nice house someday. But right now, it would be a burden instead of a blessing.
—Dave
There are other ways
Dear Dave,
I really don’t have any established credit, because I’ve never taken out a loan or had a credit card. What will happen when I’m ready to get a mortgage loan and buy a home?
Jillian
Dear Jillian,
There are basically two ways to be in a position to get a home loan. One is to have credit at lots of places and a huge FICO score. This is kind of dumb when you really think about it, but it will get you a home loan almost instantly.
When you have no credit, a lender has to do what’s called a manual underwriting. It’s something lots of banks did back in the day, when they actually used common sense when it came to making loans.
Fortunately, a few places will still work with you in this manner. They take a look at your work history to see if you have a stable job and a good income. They want proof you pay your bills on time, too. This can be as simple as showing them several utility bills, rent statements, and other receipts. They’re basically looking for a long history of proof that you honor your financial commitments.
Remember, buying a house with cash is always the best way to own a home. But I don’t beat people up over having a mortgage, as long as it’s on a 15-year, fixed rate note. Do your very best to save up for a down payment of at least 20 percent, too. That way, you’ll avoid the added expense of PMI (private mortgage insurance).
Great question, Jillian!
— Dave
