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Dave Says

By Dave Ramsey
Author, The Total Money Makeover – Finanacial guru Dave Ramsey answers questions about wise financial decision-making.

Co-Dependent Mother/Son Causing Problems

Dear Dave,
We filed bankruptcy a couple of years ago, and it looks like we may be slipping back into trouble again. A big part of this is the situation with our 20-year old son. My wife insists on helping him pay for a car and other things he financed against our wishes. She also wants us to give his girlfriend money every month to help support our two grandchildren. He’s spent some time in jail, and has trouble keeping even a part-time job. The results are killing us. What can we do?
-- Victor

Dear Victor,
Your wife has a momma’s heart and that’s a good thing. I’m sure neither one of you wants to hurt your grandchildren.

But young men who get into trouble with the law and go against their parents’ wishes have no business expecting financial support from them. This 20-year old “man” is making some really dumb choices. He’s screwing up big-time, momma’s covering his tracks and this is no way for someone to learn personal responsibility.

It sounds, too, Victor, like you and your wife aren’t on the same page. I think the two of you – together – need to sit down with a good pastor or professional counselor and come to some kind of agreement on these issues. If you work your tails off supporting immature, irresponsible grown children, you’re going to be broke and stay broke for the rest of your lives.
-- Dave

Penalty for Making Change from Universal to Term?

Dear Dave,
Before I began following your advice, I had a universal life policy and it’s not done what I thought it would or what I was told it would do. Right now, it has a $12,500 cash value. I’ve switched over to term insurance since then and would like to get the cash out of the old policy, but I’m still worried about the penalties involved.
-- Chip

Dear Chip,
Just cancel the policy. You may have to pay a small surrender charge, but you’ve got money sitting there accruing at about five percent and a bad insurance policy attached to it. It’s like having a hole in your pocket. You either keep putting money into it or you sew it up.

You’re moving in the right direction. The only question now is do you keep a bad product around just because you already bought the thing, and the answer to that is no. I’d cancel the policy, pull the money out and do some good investing in mutual funds.
-- Dave

Mother Declared Bankruptcy and Back in Trouble Again

Dear Dave,
My mom filed Chapter 7 bankruptcy four or five years ago, and I thought that taught her a lesson. She’s on disability now, and makes only about $600 a month. On top of all this, she’s piled up about $30,000 in credit card debt. Anytime she needs something and doesn’t have the money, she just pulls out her credit card. She’s even bought groceries and paid her electric bill this way. I don’t know what to do.
-- Barbara

Dear Barbara,
Well, she can’t file bankruptcy again because it’s still too close to the date of her first filing.

It sounds to me like she’s going to have to face up to what she’s done and make some behavior changes. Personal finance isn’t rocket science – it’s about 80 percent behavior and 20 percent math. The kind of stuff she’s doing is not only addictive, it’s self-destructive. She’s trading a moment of pleasure for years of pain while that credit card bill grows into a monster.

There are plenty of agencies out there that help disabled people find jobs, and help them remain active and productive in the workplace. It’s amazing what people with disabilities can do, but she’s going to have to find a way to get her income up and cut her outgoing money way down.

That’s the cold, hard fact of this, Barbara, and it sounds like she’s going to need your help to make it happen.
-- Dave

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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