Dave Says – You must pay a price to win

Need some financial advice? Debt and Income Crisis? Pay off the house first? Check cashing? Taxes? Check out what folks are asking Dave Ramsey.

 

Dear Dave,

What can someone do if they can’t convince their spouse to begin planning and saving? I’ve tried for years to persuade my wife to join me in following your plan, but I can’t get her to start thinking about our financial future and stop living in the moment.

Donald

 

Dear Donald,

It sounds like your wife, for whatever reason, is not willing to pay a price for a short period of time. I’m sorry to say it, but that kind of thinking is a one-way ticket to a lifetime of mediocrity. If you’re unwilling to pay a price to win, then you’re going to end up paying the price that comes with never having paid a price.

In essence, you’re asking me how to get her to grow up. I’m not sure there’s a way to convince her at this point. If she’s not willing to delay getting or doing things she wants, that’s a sign of immaturity. You can’t change that within another person. It must be a conscious, willing decision on their part.

Maybe you could try letting her know that being careful with your money and planning for the future doesn’t mean you can’t have any fun. It just means you may have to delay certain things for a little while. My wife and I do and have lots of cool things now, because we saved like crazy and sacrificed years ago. We lived like no one else, so now we’re able to live like no one else. In other words, we paid a price to win!

—Dave

 

Hiring the right person

 

Dear Dave,

I own a small business with two employees, and I have a bit of a hiring conundrum. I’m looking at two candidates for a position, and on paper they’re evenly matched. I’ve interviewed each of them four times, and I’m still undecided. I was hoping you had an idea for determining which is best for the job.

Bryan

 

Dear Bryan,

As an entrepreneur, that’s a great problem to have. I’m glad you understand the wisdom of interviewing potential hires more than once. Sometimes business owners hire a person after just one meeting. That’s a really bad idea.

Have you let your team members talk to them? Sometimes other people — especially those who might be someone’s co-worker — will pick up on things you missed during a formal interview. You might also think about scheduling a meeting with each of the candidates off-site. People tend to be more at ease in an informal setting, like a restaurant or coffee shop, and this could lead you to discover new things. Sometimes, a more relaxed setting allows you to see the whole person, and decide if you like who they really are. It can also lead someone to say things that might cause you to hire them — or not hire them.

Something we always do at my company is a final interview over dinner. Spouses are invited to this meeting, and we encourage them to speak into the situation. I’m not talking about a big test, just conversation and a friendly, family atmosphere. You can tell a lot about a person by how they talk to, and interact with, their spouse. And sometimes a spouse, if there is one, will catch things you missed during other interviews.

I’m impressed that you’re taking this seriously, and devoting some real time and energy to hiring. Your thoughtfulness leads me to think you’ll make the right decision!

—Dave

 

Insurance after diagnosis

 

Dear Dave,

I started looking at life insurance policies after my wife and I had our daughter. During the screening process, I found out I had testicular cancer. I went through treatments, and the doctors have officially declared me to be in remission. Still, I can’t find a life insurance company that will work with me. I have a small policy through my employer, that is equal to double my salary. Do you have any suggestions for finding additional coverage?

Nate

 

Dear Nate,

It’s great news that you’re in remission. I’m really happy for you, buddy. I know your wife is thrilled, too.

I would advise conducting a search of every “guaranteed issue” company and policy out there. The term, guaranteed issue, means they don’t do a medical check. The problem is these policies generally run 10 to 20 times more per thousand than those where you qualify medically. So, you’re not going to get a lot during this time.

Check at work, and see if you can buy more and add it to the coverage they already provide. Some employers provide a double-up option if you’re willing to pay for the additional coverage. If you can, and the price is reasonable, do it. If you have a mortgage, call the mortgage company and get mortgage life insurance. It’s gimmick insurance — and something I don’t normally recommend — but many times you can get it without medical clearance.

Once you get past that three- to five-year window where many insurance companies will work with you again, try to find a good, level term life insurance policy with coverage that’s 10 to 12 times your income, and drop all this other stuff. In the meantime, pick up anything else you can find – even if it’s those little $10,000 policies banks sometimes attach to your checking account for $20. Pile up those little odds and ends, until you get as much coverage as you can within reason.

God bless you and your family, Nate.

—Dave

 

Step by step

 

Dear Dave,

When is the right time to buy a house when someone is following your Baby Steps plan?

Samuel

 

Dear Samuel,

That’s a good question. Let’s start by going over the first few Baby Steps.

Baby Step 1 is saving $1,000 for a beginner emergency fund. Baby Step 2 is paying off all consumer debt, from smallest to largest, using the debt snowball. Baby Step 3 is where you increase your emergency fund to the point where you have three to six months of expenses set aside.

Once you’ve done all that you can begin saving for a home. I’ll call it Baby Step 3b. For folks looking to buy a house, I advise saving enough money for a down payment of at least 20 percent. I don’t beat people up over mortgage debt, but I do advise them to get a 15-year, fixed rate loan, where the payments are no more than 25 percent of their monthly take-home pay.

Doing it this way may take a little more time, and delay your dream of becoming a homeowner a bit, but buying a house when you’re broke is the quickest way I know to turn something that should be a blessing into a burden!

—Dave

 

Dave Says – It’s Baby Step 1 for a reason