The Budget Battle
By Dave Ramsey
Author, The Total Money Makeover
Financial expert Dave Ramsey answers these questions about budgets, credit issues with an ex, and buying a car for a growing family.
Paying Those Monthly Bills
I’m trying to work the Baby Steps, including building up an emergency fund and creating a monthly budget. But I’m having trouble transitioning to the new budget. I get paid in the middle and end of each month, but my bills are due at all different times of the month. Can you help?
I’d suggest a two-column budget for your situation. One column represents the first of the month, and the other represents the 15th. Place the income for that pay period at the top of each column and then work your way down, spending every dollar on paper – for that pay period – until all the money is gone.
If your cable bill is due on the 10th, it would go under the first column. If your electric bill is due on the 21st, it would go under the second column. Then you can adjust the categories where you have some flexibility. Clothing is a good example of this. You can budget for clothing in whichever pay period has the least amount of bills due.
It just takes a little time and practice, Brenda, but this is how lots of people pay their bills. And it can keep two big bills from eating up your entire first check of the month!
Soon-To-Be Ex Running Up Credit Bills
My wife and I are going through a divorce. Previously, we each had a credit card from a shared account. After she left, I got notices from the credit card company that she had charged $1,875. I signed on to the account, but she’s the primary card holder. I’ve also gotten a $1,200 medical bill for a procedure done after the separation, as well as a utility bill from her current home where we used to live. The utilities are still in my name. How can I make sure I don’t have to pay all of this?
I’m sorry, man, but you’re liable for any bill that is from a service for which you signed up – like the utilities and credit card. You need to take your name off the utilities immediately, along with any checking accounts you once shared.
You also need to contact the credit card company by mail – return receipt requested – and notify them that you will not be liable for any charges made to that account starting the day they receive your letter. Technically, you’re still liable up until then because you signed on to that account.
It also doesn’t matter that you weren’t aware of the $1,875 she charged after you guys separated. You both signed up for the account, so you’re both liable for any charges made to it. But you are not responsible for the medical bill because you didn’t sign for that debt.
You can always try and negotiate for her to pay the bills she has run up since your separation as a part of the final divorce agreement, Lee. Regardless, I’m sorry you have to go through all this.
Growing Family Has Auto Needs
We have five children with another on the way. We have two vehicles – a 1995 mini-van and a 1989 Honda Civic. With the new child, we’ll have outgrown the mini-van. The Civic isn’t big enough for all of us, but both cars are paid for, and the only debt we have is a couple of credit cards. We’re working on our budget and trying to pay our debt down. How do we move to a bigger vehicle without going deeper into debt?
How about this: let’s trade your van for one that’s full-size?
Don’t worry. I’m not suggesting that you go into debt to make this happen. Just get a larger vehicle that’s an even swap for your mini-van. You might end up with a van that’s not as nice, but it will carry more people and get you around until you get your debt cleaned up. Then you can save for a nicer van and pay cash for it.
Good question, Carrie!
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Dave Ramsey is a nationally-syndicated radio talk show host and author of the New York Times bestselling books, Financial Peace Revisited and The Total Money Makeover. His life-changing advice in the area of personal finance helps people get out of debt, stay out of debt and build wealth that will last a lifetime and beyond.
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