Commentary

Fix old car or replace with new one?

Dear Dave,

My old car has been having lots of problems lately. Do you have any advice on how to decide when it’s best to just fix an old car or get a newer one instead?

Kristin Dear Kristin,

This is a good question. Mathematically, the first thing to look at is the car’s worth if you don’t make repairs. Should you spend $1,000 to increase the value of the vehicle $500? Dumb question, right? At that point, you sell the car as-is and put the $1,000 it would take to fix it toward something newer.

On the other hand, let’s say you’ve got a little hooptie worth $1,000 but by putting $500 into it, you can have it up and running again. Suddenly it’s worth $2,500. That’s money well-spent, because what you’ve done has significantly increased the value.

The other side is that at some point, the hassle factor of an old car can turn it into a money pit. If you can’t get anywhere because the car’s always busted, then you need to find something else for the sake of safety and reliability. If this happens, though, you should still pay cash for a better car. Even if you’re not taking a step up in price or fanciness, it’s still better than taking on a car payment. I’d walk or ride a bike everywhere before I did that!

—Dave

You lacked clarity

Dear Dave,

About 17 months ago, my wife and I allowed a lady who had lost her home to a fire to move into an empty house we own and had thought about selling. During that time she’s made no effort to pay rent. My wife wants to write it all off and just give her the house and title, but I think she owes us something for putting a roof over her head. What do you think?

Thomas Dear Thomas,

Honestly, I think you handled this situation poorly from the very beginning. From what you’re telling me, you put her there originally on a charity basis, and now you want to change the deal. You didn’t say anything about giving her a house, but you didn’t set up a rental agreement either. And now you’re acting like she owes you 17 months of back rent. I don’t think so. I think that’s on you.

Now, you have some decisions to make. Were you providing free housing to someone who was struggling, or were you providing a free house to someone who was struggling? I understand this lady has experienced a terrible tragedy, but even with that, I’m not hearing lots of evidence that she’s moving toward gaining control and getting her life back together. You may be giving a drunk a drink, if after 17 months of this situation she’s not back on her feet again and out on her own.

If it were me, I’d sit down with her and have a gentle talk. Let her know the last 17 months were a gift, but you want to see her making her way and winning at life again. Set a reasonable time limit, whether it’s six months or even a year, and tell her you’ll be selling the house at that point. This is fair to her and to you guys as well.

—Dave

Bad boat deal

Dear Dave,

My wife and I are on Baby Step 2 of your plan, and we’re paying off our debt. I’ve been trying to sell my motorcycle and listed it for $5,000 on Craigslist. The other day, a guy offered me $2,000 cash and a boat for the bike. I’ve always really wanted a boat, but I’m not sure this is the time. And the money would only make a small dent in our debt. Would this kind of deal be legal in the Dave Ramsey universe?

Matt Dear Matt,

It’s an interesting deal, but at this stage of the game I think you have to ask yourself what your goal is. If it’s to get a boat, then you’ve accomplished that goal. However, if your goal is to get out of debt, this deal doesn’t get you where you want to be. Plus, it could add even more expense and hassle to your life. Upkeep and maintenance on some boats can really add up.

But this is Matt’s universe, not Dave’s. In my mind, getting out of debt comes first. There’s plenty of time later for you to save up and buy a nice boat after you get control of your finances. In this scenario, you’re simply trading one recreational vehicle for another.

If you’re on Baby Step 2, it means you’ve already got $1,000 in the bank for emergencies and have moved on to paying off all your debt, except for your home. This tells me you guys are motivated, but the idea of a boat has caused your resolve to waver a little.

So, if you’re looking for someone to tell you to forget the boat and stay on track with getting control of your lives and money, then I’m your guy. Don’t do the deal!

—Dave

Quit impulse spending

Dear Dave,

I’m trying to convince my husband to leave his debit card at home when he goes to work. He says he wants it for emergencies, but he’s always using it for other things. I’d rather him just carry a very small amount of cash so he’s not so tempted. What do you think?

Haley Dear Haley,

I understand your concern, but I think you’re wrong on this one. I carry my debit card with me everywhere I go, and I want my wife to do the same. What your husband needs to stop doing is having “emergencies.” The translation? Stop the impulse spending!

Now, this could be happening for several reasons. It could be that he’s a good guy, but he’s just not paying attention to how much he’s spending. On the other hand, you guys may not be budgeting for fairly reasonable things—like if he wants to eat out for lunch once in a while.

But even if he’s not using it, he should still be carrying a debit card. I mean, what if he has a real, actual emergency? The idea that you shouldn’t carry a debit card just because of impulse spending isn’t a good plan. Things like that aren’t debit card problems. They’re either maturity problems or a lack of realistic budget planning.

—Dave

What the law will allow

Dear Dave,

A debt collector has been calling members of my family to get information on me. She has identified herself as collector, and I want to pay what I owe, but is it legal for them to do this? If not, what can I do to make them stop?

Katherine Dear Katherine,

No, it isn’t legal. If she identified herself in any way as a debt collector, and spoke with anyone but you about your debt, she has broken federal law. This is a violation of the Fair Debt Collection Practices Act. You need to file a complaint with the Federal Trade Commission (FTC) against this collector and her company.

I would also advise recording the conversation the next time they call. Just tell them at the beginning that you’ll be taping any interaction you have with them from that point forward, and tell your relatives to do the same thing. That way, you’ll have proof of their misbehavior to hand over to the FTC or the attorney general. You might even be able to get this crooked collector shut down.

Don’t get me wrong. It’s perfectly okay to collect a debt. If you’re a creditor or collector, it’s simply money that’s owed to you, and you deserve it. But you must do it within the confines of the law, and you should do it within the confines of good taste. If you owe money, you should be honorable enough to pay what you owe. But this kind of behavior is just harassment and intimidation. Don’t let them get away with it, Katherine!

—Dave

Dave Ramsey is a trusted voice on money and business. He’s a best-selling author and his radio show is on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.


Click here for digital edition
2012-09-06 digital edition



The burn ban for Milam County has been lifted. Burning is always prohibited in the county's municipalities.


Special Sections


Special Sections
Archive