Mormon Life - Savings tag

Dave Says: Short Term or Greater Good?

Tue, 15 May 2012 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: I don't use credit anymore - only debit - but I still overspend. Should I get rid of cards altogether?

Dear Dave,

I have a problem with impulse spending. I switched to a debit card so that the money comes straight out of my checking account, but I still buy things I know I shouldn’t. Should I stop using the card?

Lauren

Dear Lauren,

First, let me say that debit cards are great. You can’t spend money you don’t have with them like you can with a credit card, but you’ve still got to budget carefully and give a name to every single penny of your income. Otherwise, you can still overspend.

When I made the decision to get intentional with my money, I just used cash. It’s hard to spend it when you don’t have any on you. It’s a tough thing, I know, but you have to make a conscious decision to start living differently. You have to get mad at the things that steal your money a dollar or two at a time, and you have to put your foot down. Enough is enough!

Try looking at your life as a whole, not a moment at time. All the moments you’re living right now will have either a positive or negative effect on your future. I decided I wanted the greater, long-term good, so I gave up on the short-term stuff. No discipline is pleasant when you’re doing it, but as the Bible says, it yields a harvest of righteousness.

Trust me, Lauren. The greater good is worth the sacrifice. But until you make that decision for yourself, you won’t do it.

—Dave

For more financial help, please visit daveramsey.com.

Make Your Retirement Money Last

Mon, 02 Apr 2012 11:09:00 -0600

by Mountain America Credit Union
source: MormonLife.com

Mormon Life says: These five tips will help you save enough so that you don't run out of money during retirement.

What are the chances you’ll run short of money in retirement? The Employee Benefit Research Institute, Washington, D.C., predicts that 47 percent of early baby boomers ages 56 to 66 and 43 percent of late boomers ages 46 to 55 are at risk of having insufficient income in retirement to cover basic retirement expenses, as well as uninsured health care costs.

These five tips offer the insight to help you achieve everything on your retirement bucket list.

Save more—The 10 percent savings objective that was the standard years ago might leave you short down the road. These days a savings goal of 20 percent of gross income is a better target, with that percentage increasing the later you start.

Plan for more expenses in retirement—Many retirees say they spend as much as, or more than, when they worked. As a general guideline, plan on replacing at least 80 percent to 100 percent of preretirement income.

Be realistic about working in retirement—Despite plans to pursue some sort of employment in retirement, most retirees never return to work. If you intend to keep working past age 65, now is the time to ask employment counselors or your company’s human resources department for advice about continuing your career.

Pay more attention to retirement planning—To be really well prepared, you and your financial professional should have a strategy for how you will manage and allocate your investments throughout your retirement years. From which accounts will you draw your income? How much can you afford to take out each year? How will you insure yourself so that your medical and long-term health-care needs are covered? How will your estate ultimately be managed and distributed?

Invest more aggressively when you are young—Generally speaking, higher returns come with higher risk. In one example, three investors each invested $250 per month for 25 years. The most aggressive of the three accumulated $422,546, the most conservative accumulated only $271,120 and the moderate investor ended up with $374,055. Typically, you can’t afford to take big risks in your 50s and 60s, so the time to invest for maximum growth is when there are decades between you and retirement.

Finally, one of the smartest, and easiest, steps to help you plan for retirement is to meet with a financial professional, like those at Mountain America. They can help you assess your situation and plot a course toward a successful retirement. To schedule your free consultation, visit a Mountain America location near you or call us toll-free at 1-800-748-4302.

These strategies do not guarantee a profit or protect against loss and may not be suitable for all investors. Each member’s specific situation, goals and results may differ. Past performance is not a guarantee of future results. Individual members should review with their Mountain America financial professional the terms, conditions and risks involved with specific products and services.

Dave Says: Question about Home's Value

Tue, 13 Mar 2012 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Is it legitimate for a law firm to offer protesting the value of our home in return for 50 percent of any tax savings? Dear Dave,

We keep getting offers in the mail from a law firm that offers to protest the assessed value of our home for property tax purposes. They say that we’ll pay them nothing if they can’t save us money, but if they do the fee is 50 percent of the property tax savings. Do you think it’s ethical to dispute these findings, and are these services legitimate?

Kristen

Dear Kristen,

There’s no real problem with this, so long as there are no up-front fees. The real question, though, is whether your assessment is accurate.

First, there would have be some kind of basis for the protest – like if your assessment is really out of line compared to similar homes in the neighborhood. Usually, they aren’t assessed at 100 percent. But if you discovered that a comparable home was assessed at 73 percent and yours was based on 82 percent, then you’d have both an ethical and legal right to protest the assessment.

I think one of two things will happen. If you talk to this firm, you’re either going to find out that there’s something going on with the tax base that makes them think they can actually reduce the numbers, or they’re going to try and hit you with a “processing fee” or some other kind of garbage.

If this is the case, you should just walk away.

—Dave

For more financial help, please visit daveramsey.com.

Dave Ramsey: What's Your Emergency Fund Range

Tue, 31 Jan 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: How do we determine whether to save on the high or low end of the emergency range?

Dear Dave,

In your plan, you talk about Baby Step 3 as saving enough to have three to six months of expenses in your emergency fund. My husband and I were wondering how you can determine whether you need to be on the low end or high end of that range?

Amanda

Dear Amanda,

Lots of times in a marriage you’ll have a situation where one person wants to save more, while the other is excited to move on toward investing. Technically, neither is wrong. So, the emergency fund really deals with someone’s own personal level of peace. Remember Murphy’s Law, and how it says that says if something can go wrong it will go wrong? Your emergency fund is Murphy Repellant. Some people just want to make sure he doesn’t knock on the door, while others make sure he stays in the next county!

There are always practical considerations you can use to determine the amount of your emergency fund. If you both have very stable jobs, you’ll probably be okay saving up three or four months of expenses. But if just one of you works outside the home, or if one is self-employed or on commission, leaning toward the six month side is probably a good idea.

Of course, you can always compromise. Start out with three months, but add a little every once in a while until you reach a point where you’re both comfortable.

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Lay the Foundation First

Tue, 24 Jan 2012 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: What should we do next to become more financially secure?

Dear Dave,

We’ve read about your plan, and we’re in pretty good shape financially, but we don’t know what to do next. We have $400,000 in a 401(k) for retirement, but we don’t have an emergency fund or any other savings. The only debt we have is our house. What should we do about Baby Steps 4 and 6?

Mary

Dear Mary,

You guys have done a great job of saving for retirement and staying out of debt. Let’s go over the Baby Steps you mentioned. Baby Step 4 is putting 15 percent of your income into Roth IRAs and pre-tax retirement plans. Baby Step 6 is paying off your home early.

The thing that worries me is you’ve completely skipped Baby Step 3, which is having three to six months of expenses in an emergency fund. This is money set aside strictly for emergencies, not vacations, toys or a new car. The problem right now is if you have a real emergency, you’ll have to cash out your 401(k). If you do that, the government’s going to penalize you 10 percent, plus your tax rate. That’s about a 40-percent kick in the teeth just because you didn’t do things in the right order!

Again, you’re in pretty good shape overall, but in building your financial house you’ve put the roof on before you’ve laid the foundation. If I’m you, I’m going to temporarily stop my 401(k) contributions until I get my emergency fund fully loaded. By temporarily, I mean six months at most. That way, you’ll be covered when life happens without having to sacrifice your retirement savings!

—Dave

For more financial help, please visit davesays.com.

Dave Says: Just What She Needs

Tue, 24 Jan 2012 00:02:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Should my daughter use a financial windfall to pay off student loans or invest in a Roth IRA?

Dear Dave,

My daughter is a student and has $13,000 in student loan debt. Recently, her grandparents dissolved an LLC, and they want to give her a gift of $12,500. Should she use this money to pay off the loans, or invest it in a Roth IRA and keep working to pay off the student loans herself?

Meg

Dear Meg,

Let’s look at it this way. Pretend she didn’t have any student loan debt. Would it be wise for her to borrow money on a student loan in order to invest in a Roth IRA? Of course not. If you don’t pay off the loans, and invest it instead, it’s just like you borrowed money to invest. That’s not a good plan.

Your daughter needs to get her student loan mess cleaned up, and this is the perfect opportunity to do just that. And I think it’s pretty cool that God gave her what she needs to fix things. Besides, she can’t do a Roth IRA, except to the point that she has an earned income, anyway.

The last thing this girl needs is a pile of debt waiting on her when she gets out of school. She’s not in a position to be an investor right now. The minute she pays off her student loans, she should get to work on saving a pile of money for an emergency fund so she can complete her studies without racking up more debt!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Fifteen Percent

Tue, 22 Nov 2011 00:03:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: You say to save 15 percent of your income for retirement. Can you explain this a little more?

Dear Dave,

Would you explain your 15 percent requirement on retirement contributions as listed in the Baby Steps?

Melanie

Dear Melanie,

When I talk about Baby Step 4, which is saving 15 percent of your income for retirement, I’m talking about 15 percent of your gross annual pay. Now, you don’t have to get too nerdy about it. It’s not like you’re going to die a pauper if you only save 14 percent, or be ridiculously extra-wealthy if you save 16 percent. The bottom line is you should be able to save $7,500 a year if you make $50,000 annually. That’s only about $600 a month.

But, the only way you can do this is if you lose stupid things like car payments and credit cards. Get out of the land of MasterCard bondage and American Distress! When you get out of debt, it’s easy to set aside an emergency fund of three to six months of expenses and breeze right along pumping 15 percent into retirement.

By the way, did you know you can retire with about $7 million if you save 15 percent of a $50,000 a year income and invest it in good growth stock mutual funds starting at age 30?
Sounds like it’s worth doing to me!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: The Car, or the Snowball?

Tue, 27 Sep 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: We're working on becoming debt free, but our car is on its last legs. Should we put our debt on hold and get a car?

Dear Dave,

We’re working on our debt snowball and are scheduled to become debt-free except for our home a year from now. The problem is I’ve got a very old car that’s on its last legs. Would it be okay for us to put the debt snowball on hold for a month or two, and save up money for a newer, inexpensive used car that’s in better shape?

Jonathan

Dear Jonathan,

I’d hold on to it if your car can make it a while longer. But if it’s really on its last legs, and you’re about to fall through a rusted floorboard, you might consider your plan. You need to ask yourself if you’re just whining, or if it’s an actual situation.

It sounds like you guys are doing a fabulous job so far of paying down your debt. Even if you take a month or two off to save up for a better car, you’ll still have everything paid off except the house in about the same period of time. I’m not going to fuss about a couple of months’ difference in this kind of situation.

Doesn’t it feel great when you actually sit down and take a moment to think and formulate a plan instead of just wandering around lost? You guys have thought this thing out, and now you’re ready to move ahead with a sensible idea!

—Dave

* For more financial help please visit daveramsey.com.

Dave Says: Don't Do It!

Tue, 20 Sep 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Should we take the first-time homebuyer deal we're being offered?

Dear Dave,
My husband and I have been married for three months, and we’re debt-free. Right now, we’re trying to save up a 20 percent down payment for a house. I work for a real estate company, and they’re really pushing us to take advantage of a first-time homebuyer deal. The program offers 100 percent financing, no money down and no private mortgage insurance. They say it’s a great deal. What do you think?

Stacy

Dear Stacy,
You guys are off to a great start! Don’t blow it now. Those people are wrong. I grew up in the real estate world, and this is a bad idea.

Slow down. It’s great that you guys are young and debt-free, but you need to do things that are smart for you. And for you, smart includes a couple of things. First, make sure you have an emergency fund of three to six months of expenses in place. Then, keep saving up for a big down payment.

You know, when I hear the advice you were given I just want to smack somebody. Haven’t the mortgage lenders learned anything from the last few years? Nothing down, interest-only and sub-prime loans are a big part of the reason for the financial debacle in this country. A house is not a blessing when you’re broke, and a bargain is only a bargain when you’re ready to buy!

I always recommend waiting at least a year after you’re married to buy a house. It takes that long to decide how close you want to live to your in-laws! Plus, you want to spend some time getting used to each other, and knowing each other even better, before making what will be your largest asset purchase.

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: A Down Payment Is Not an Investment

Tue, 30 Aug 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: How should I invest the money I'm saving for a house?

Dear Dave,

I’m saving up money to buy a house in the next couple of years. How should I invest this money before I actually buy something?

Candace

Dear Candace,

The problem is that you’re not really investing; you’re just saving. Investing means you aren’t going to touch the money for five years or more. If you may use the cash to buy something within five years, you’re really just kind of “parking” the money for a little while.

If it were me, I’d put it in a money market account. It’s basically just going to sit there and not earn much, but you won’t lose anything, either. If you’re lucky, you might see one percent interest in the short term, but that’s about all you can expect considering the low-interest rate environment we’re in these days.

—Dave

* For more financial help visit daveramsey.com.

Coupon Savings: A Simple Guide for the Beginning Couponer

Tue, 23 Aug 2011 00:05:00 -0600

by Jamie Cline
source: MormonLife.com

Mormon Life says: How would you like to do some simple work for $50 an hour, a couple hours a week? Most of us would jump at the chance, especially when budgets may be getting a little bit tight. This “job” is open to any who are interested—and your job title will be “couponer.” "Whoa, whoa, wait," you’re thinking. "I’ve seen that new show. Those couponers devote their lives to those weird stockpiles of mustard, soda, and toilet paper. Those people are crazy. That is so not for me."

No matter what you’ve seen on TV, this is not the norm for most people who coupon. You can save tons of money a week with only an hour or two of work—and we’re going to show you how.

Couponing Concerns
We polled couponers and asked them what they were most worried about when getting started. Then we asked Melea Politis, author of Freebies2Deals.com, a booming couponing blog that gets upwards of 23,000 hits a day, to respond to their, and your, concerns.

“I was afraid that I couldn’t use the coupons, or that the cashier would tell me he wouldn’t accept them. Also, I wasn’t sure where I could use coupons.”
—Heather Mailo; Elk Grove, California

MP: Just about every grocery store accepts coupons. If you aren’t sure, you can ask customer service for their coupon policy. Just be clear on the policy and you won’t have any problems using them at your grocery store. I’ve never run into a grocery store that doesn’t accept coupons, because each store actually makes $0.08 to $0.16 off of your use of them.

“I always feel lame and poor when I use coupons, and I always feel the urge to apologize to the cashier and everyone behind me.”
—Cassie Randal; Houston, Texas

MP: Don’t apologize! You are being smart and saving money for your family. If anything, you should feel bad for the people who are paying full price for the same items you are getting for ridiculously cheap or [for] free. When you get up to the register, kindly let your cashier know that you will be using coupons today and you will have them all ready to go when he/she is ready.

Depending on how many coupons you are using, it may take a little longer than normal to check out at the register. You might want to let the person behind you know that you will be using coupons and they might want to pick another checkout lane. They will either be extremely happy you told them or they will be so intrigued by your using coupons that they will eagerly watch you check out!

“I was way intimidated. I actually started it up and then quit because I thought it was so hard.”
—Veronica Chugg; Mesa, Arizona

MP: Using coupons can be intimidating for sure. However, the more knowledge you gain about efficient coupon use, etiquette, and policies, the less intimidated you will feel. Also, don’t try to do couponing all on your own. There are many couponing sites that will actually do all of the work for you. They will tell you where to go, what to buy, which coupon to use and more. It really makes saving money so much fun and super easy on your part.

The Great Coupon Scheme
Without further ado, let’s start saving you some cash.

Step 1: Get your coupons. The most common type of coupon you will use is a manufacturer coupon (a coupon printed by the manufacturer, like Kraft). You can get the bulk of these from the newspaper or from a coupon site, like wholecouponinserts.com. They are also distributed online as eCoupons. Store coupons are also great, and you can usually get them from the front of the store or from the customer service desk.

Note that you can use only one manufacturer coupon and one store coupon per item. A store will not let you use several $1-off coupons to make a $4 item free. However, if you had a $2-off manufacturer coupon and a $2-off store coupon, the $4 item would be free.

Step 2: Find a coupon blog. This will be your saving grace, because the best kept secret of couponing is this: The coupons don’t actually save you a ton of money. It’s the sales plus the coupons that saves you the money. For example, if you want to buy Kellogg’s cereal and you have a $1-off coupon, the cereal will probably still cost $3. Not that great. But if the cereal is on sale for $2.15, and then you use your $1-off coupon, the cereal is $1.15. Now that’s a deal!

Who has time to find the sales and then match up the coupons? Nobody! However, authors of these couponing blogs do the work for you—each week they scour the sales and match them up with coupons, then tell you what the best deals are and which week the corresponding coupons were released. There are many coupon blogs, but here are a few favorites of couponers:

•    thefrugalfind.com
•    southernsavers.com
•    thekrazycouponlady.com
•    freebies2deals.com
•    hip2save.com

Every one of the sites listed above has a “Getting Started” link that will guide you through the couponing process and will hopefully answer any questions you might have about couponing details. This includes abbreviations used on the site, drug store rewards programs, and coupon policies. If you have any additional questions, most bloggers will respond to an email.

All of the above coupon blogs also regularly post other great deals, so you might want to subscribe to their newsletter so you don’t miss out on great deals on clothes, magazine subscriptions, and activities in your area.

Step 3: Pick a store. Start small and coupon at only one store first. All of the websites listed above post the couponing policies for all the stores that they cover, so you can quickly check and see what your favorite store will take. We recommend starting with a grocery store, as the rewards programs at drugstores like CVS are really great, but complicated when you’ve just started couponing.

Step 4: Make your shopping list. Now that you’ve got your coupons, your couponing blog, and your favorite store, it’s time to really get down to business.

Go to your couponing blog, and click on your favorite store. Find this week’s deals post, and make sure you click on the blog title so you will see the entire shopping list.

Decide on which items you want and print out your list. Remember that you should buy any low-priced items that you might need soon, even if you don’t need them now (products usually go on sale every 6 to 8 weeks).

Print out any eCoupons (also called printable coupons) you might want to use. Blogs will usually post a link that will direct you to the site where the coupon is, but it is usually up to you to find the actual coupon on the site (You will usually have to flip through a few pages of grocery or household coupons before you find the one you want. On manufacturers’ websites, you will probably have to fill out a form. We suggest you create a junk email address for this purpose).

Step 5: Clip your coupons. Start at the top of your list and work your way down. Most blogs abbreviate a lot when listing their deals, but here’s a simple example. If the blog lists that Jell-O pudding is on sale and states there is a $1-off Jell-O in 4/3 SS, that means that you find your SmartSource insert from April 3, flip through it until you find that coupon, then clip it out.

Step 6: Go to the store, and don’t get distracted. Stick to your list unless it’s something you really, really need. Chances are, if you can wait, it’s going to go on sale in a few weeks. Smile and tell the cashier you will be using coupons today, then watch as your total drops lower by the second.

It may sound a bit complicated, but after doing it for a few weeks, it will get easier, take less time, and drop your grocery bill. When you are saving a couple hundred dollars a month, the few hours you put into learning how to do it will be completely worth it.

A New State of Mind
One of the greatest things about becoming a couponer is that along with saving money on grocery items, you become more aware of what you are spending in other areas. Jaylene Scott, an avid couponer since September 2010, says, “My family and friends now joke that I won’t buy anything unless I have a coupon, it’s on sale, or I can get it for free. I feel that it has made me a smarter shopper in general because I’m paying attention to how much money I’m spending on everything—not just groceries.”

Scott has been able to cut her grocery bill in half, saving her family about $200 to $250 a month, which allows her to stay at home with her young daughter Lydia without breaking the bank. “With the money I’ve saved, we’ve also been able to get out of credit card debt,” says Scott. “What a great feeling!”

Dave Says: Enough for Retirement?

Tue, 23 Aug 2011 00:03:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: Why do you say I should have a million or two saved up for retirement? Dear Dave,

I’ve heard you tell people that having $90,000 to $100,000 saved up for retirement isn’t enough. That’s what I’ve got set aside right now, and I’m pretty sure it’s all I’ll ever need. Why do you think everyone should have a million or two saved up?

Tom

Dear Tom,

The amount you’re talking about isn’t enough to retire on with any kind of dignity. If you make 10 percent off your money over time it means you’re living on just $10,000 a year. That’s below the poverty level.

Don’t misunderstand my message. I’m not about being greedy, and money is not the key to happiness. Money is good for three things – personal security, helping others, and it’s good for fun. You need to do some of all three.

What I am about is changing my family tree. With money we can create and leave behind the training and resources to make a huge positive difference in the world. I want good people to have big piles of money in order to do good things.

This is true of my own family, too. I don’t want to leave my kids in a situation where they have lots of money and no sense of responsibility. I want to train them to be responsible and generous so they can really bust loose with that big pile of cash they’ll inherit one day. I want them to be able to have an impact three generations down the line in our own family and to impact the world around them in a fabulous way!

—Dave

* For more financial help please visit daveramsey.com.

Dave Says: Bargain Master!

Tue, 16 Aug 2011 00:04:00 -0600

by Dave Ramsey
source: MormonLife.com

Mormon Life says: What are your best tips for bargaining on an item? Dear Dave,

Can you share some tips on bargaining, whether for a used car or even a washer and dryer in the classifieds?

Ray

Dear Ray,

This is a great question! Bargaining is one of my favorite things to do, but it’s a little harder for me to get away with it these days.

There are three points to remember when it comes to getting a bargain. The first is that whoever has the most information wins. This means you need to shop around, do some online research, and become an expert on the value of the item you want to buy.

Number two, don’t be afraid to flash the cash. Money, especially cash money in your hand, is an emotional thing. Lots of times it will motivate someone to accept your offer—even if it’s a little less than what they want for the item in question.

The third thing is patience. Don’t get all hot and bothered about a certain item at a certain place. Calm down and be willing to wait for a deal. You lose your ability to negotiate a great deal—not to mention your walk-away power—if you get all worked up and married to something before you know what else is out there!

—Dave

For more financial help, please visit daveramsey.com.

Dave Says: Prepping Kids for Healthy Habits

Tue, 16 Nov 2010 00:05:00 -0700

source: MormonLife.com

Mormon Life says: How do you teach young children about paying tithing? Dear Dave,

We have two kids, ages eight and 11. When they get some money we have them take out 10 percent for tithes or giving, and 10 percent for saving. It’s difficult with the younger one sometimes, because all he wants to do is spend money. And really, what’s the point if he gets ten dollars of putting away just a dollar? How do you convince a child this age that it’s good to save?

Allen

Dear Allen,

First, I think you’ve got a nice plan in place working with them on saving and giving. With a kid who’s eight, you start out by explaining it the best you can on his level. Then, if he still doesn’t want to do it, you make him do it anyway. Sometimes, as a parent, you have to pull rank when it comes to doing what’s best for the kid.

Now, here’s the point of saving, even if it’s only a dollar. You want to make sure you teach them a pattern of habits that will help them win in life. When your kids have homework you make them sit down and do it. Then, you help them when they need help, right? The point is you want them to learn good study habits, so that when they get into high school and beyond they can succeed. That one dollar won’t make him rich right now, but getting into the habit of saving – because his mean, old dad made him do it when he was a kid – will make him wealthy one day!

You might try setting goals for him, too. Lots of younger kids have trouble with the concept of saving. But if you set some goals, and let him save up a little bit of money and pay for something himself, it will be a real lesson for him. It will show him that delaying pleasure really pays off.

Make sure you start out small, with a few easily attainable goals. Then, you’ll be paving the way for bigger things, like saving for a car and maybe even college!

—Dave

*For more financial advice please visit daveramsey.com.

Dave Says: Buying Used or New?

Tue, 09 Nov 2010 00:02:00 -0700

source: MormonLife.com

Mormon Life says: For some things, it's smarter to buy them second-hand. Dear Dave,

What things do you advise buying used versus buying brand new?

Amy

Dear Amy,

This is a great question. But I’m afraid there’s not one good, across the board answer, because it all depends on where you are in your financial plan.

When it comes to cars, you should always buy good, used vehicles, unless you have a million dollars in the bank. New automobiles drop in value like a rock, so buy smart and let someone else take the hit in depreciation. My advice is to buy used, anyway. Wealthy people don’t become wealthy by investing in things that go the wrong way.

If you’re talking about clothing, and you’re broke or trying to get out of debt, there’s absolutely nothing wrong with shopping consignment stores—especially for kids. They wear things three times, and then they’ve outgrown them. Plus, they still look practically brand new. “Experienced” clothing is a great buy for adults, too.

Of course there are other things, but here’s the deal. As your money situation improves, you’ll be able to buy more new things. The price of “new” will become a smaller and smaller percentage of your financial world. But when you’re broke, deep in debt, or don’t have a big income, any money you spend on anything is a big percentage. At times like this, a $50 washer or dryer on Craigslist can be the best deal on the planet!

—Dave

For more financial advice please visit daveramsey.com.

Dave Says: Time to Buy a House?

Tue, 02 Nov 2010 00:06:00 -0600

source: MormonLife.com

Mormon Life says: Is buying a house during your first year of marriage a good idea? Dear Dave,

My fiancé and I are looking to buy a house a couple of months after we’re married. We’ve saved about $50,000 toward the down payment, and the payments on the house we like would only be $202 a month on a 15-year mortgage. Does this sound like a good idea?

Robbie

Dear Robbie,

You guys have done a great job saving up all that money. But I think newly-married couples should wait at least a year before buying a house. In that first year of marriage you’ll get to know each other even better than you do now. It will also give you time to figure out just how far away from your in-laws you want to live!

Spend the first year loving on each other, and mapping out a plan for your lives together. You can save even more money in the meantime, and if you’re lucky, you might be able to pay cash for that first home when time rolls around.

Don’t fall into the trap of thinking you have to run straight to the real estate office right after you slip the rings on each other’s fingers. That’s a mistake lots of young couples make, and end up regretting it later!

—Dave

For more financial advice please visit daveramsey.com

Bailing At the Wrong Time

Tue, 19 Oct 2010 00:02:00 -0600

source: MormonLife.com

Mormon Life says: My wife and I are both 58, and she has $250,000 in a 401(k) that has lost 20 percent in the last couple of months. Should we move it to something else? Dear Dave,

My wife and I are both 58, and she has $250,000 in a 401(k) that has lost 20 percent in the last couple of months. This represents the vast majority of our savings. We probably won’t need the money for at least another five years. Should we move it to something else?

John

Dear John,

It’s normal to be a little bit scared when the markets are as crazy as they’ve been lately. The fact that the news media has been going bananas with all this doesn’t help matters, either.

Here’s the deal. Ninety-seven percent of the five-year periods in the stock market’s history have made money. So far, 100 percent of the 15-year periods have made money. That’s a pretty solid history. You’ve got time for the markets to recover.

Chances are, you won’t be using this money for another 10 years or so. Even if you retire early, you’ll probably just pull an income off of it instead of cashing it all out and hiding it in your basement, right?

Think about this, too. Since 1978, the market has dipped 10 percent or more about a dozen times. It has recovered within two years 90 percent of the time. If you got out now, John, you’d be leaving at exactly the wrong time!

—Dave

* For more financial help, please visit daveramsey.com.

Does Pride Keep Us In Debt?

Tue, 05 Oct 2010 00:10:00 -0600

source: MormonLife.com

Dear Dave,

Would you agree that pride is our biggest problem when it comes to debt?

Brian

Dear Brian,

That’s a really interesting question. I think pride is definitely toward the top of the list, but I’d say the biggest cause of debt is immaturity.

One really good definition of maturity is learning to delay pleasure. When you can’t wait to buy the video game, or the car, or the iPhone, then that’s a sign of immaturity. It’s like a four-year-old fussing and whining, “I want it right now!” Give me a break! That kind of stuff makes me sick.

But you know, pride may be the biggest reason people keep debt. People who walk around worrying about what everyone else would think if they got rid of the big house or the fancy car—worrying that everybody else would think they’re broke—now that’s pride. But it definitely enters into the equation.

—Dave

* For more financial help please visit daveramsey.com.

Buy or Wait?

Mon, 08 Mar 2010 17:00:00 -0700

by Dave Ramsey
source: MormonLife.com

Mormon Life says: I'm 18 and I have the means to buy a house soon. Should I pay cash or get a mortgage? Dear Dave,

I'm 18, and I have a job making $30,000 a year. I've also got about $40,000 in stocks and $10,000 in savings. I want to buy a house in the near future. Should I pay cash and buy it outright, or is a 15-year mortgage okay?

Sam

Dear Sam,

I love the idea of paying cash for a house, but I'm even more impressed that you've got $50,000 you could put toward a house and a job making $30,000 a year at age 18. Man, you're really kicking it!

It's a great time to buy a house. Interest rates are low, and prices are great. But the thing that keeps sticking in my mind is that you're still just 18 years old. Now, there's nothing wrong with being 18, but there's also nothing wrong with waiting a few years and getting a little more life experience under your belt before you saddle up with a mortgage.

At times like this, I think about what I'd tell my own 18-year-old son. And honestly, I think I'd advise him to wait and let life happen for a while. I'm not putting you down because you're 18. You've done some amazing things. But I think the best thing would be to keep piling up cash, then take a look and see how you feel and what your life is like in two or three years.

You've got lots of time and a huge head start already. Plus, there will still be plenty of properties out there. Then, when the time is right, either pay cash or do a 15-year, fixed-rate mortgage. And if you take out a mortgage, make sure the monthly payments are no more than 25 percent of your take-home pay!

Great job, Sam!

-Dave

* For more financial help, please visit daveramsey.com.

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