By Dave Ramsey
Author, The Total Money Makeover
Financial guru Dave Ramsey answers questions about wise financial
Money Matters and Marriage
My wife and I are $60,000 in debt, and all of our credit cards
are maxed out. I make $30,000 a year, and we’ve got virtually
no savings or emergency fund. The other day I took all the cards
and cut them up and closed the accounts. She’s a little
angry about this, because she wants them in case of emergencies.
What can I do?
First of all, you’ve never heard me tell anyone to take
credit cards away from another person – especially a spouse
- and just start chopping. Even if they have your name on them,
this kind of thing requires careful discussion and agreement between
two people. I can understand why she’s angry right now,
boss. I’m guessing you may have spent a night or two on
the couch over this one!
Communication is an essential part of any good marriage. Now,
I agree with your logic. You guys are $60,000 in debt, so it’s
about time the cards were cut up. But I don’t agree with
your method. The bottom line, Leon, is that emergencies are a
valid concern even though her answer to them is wrong. If she’s
angry it’s going to make it even tougher to get her on board
with the idea of establishing an emergency fund and getting out
If I were you, I’d apologize. You just took over, wrenched
control of the situation away from her, and that’s one of
the reasons she’s angry. Then, I’d sit down with her
and find out how much it would take in an emergency fund to make
her feel comfortable. I recommend three to six months of expenses.
So, if your total household expenditures for the month are $2,000,
then you’d need anywhere from $6,000 - $12,000.
After this, the two of you can decide together how you want
to build this emergency fund. Try to agree on how much to pump
into it each month, and you might even want to sell a few things
and use the money to help build it even faster. It’s a lot
easier to pull a rope than to push it, Leon, and you can’t
convert someone with a baseball bat. You can beat them into submission
or fear, but you don’t convert them that way and you don’t
win someone’s heart by using force. Cooperation, not coercion,
is the key.
Sell stock to get out of debt?
I have about $5,000 in individual stock, and $6,000 in debt.
Should I sell the stock and pay off the debt?
-Leann via email
Let’s look at it this way. Pretend you only had $1,000
in debt, and you had a credit card with a $5,000 open line of
credit. Would you go borrow $5,000 on it to buy that stock? Of
course not. It’s the same kind of thing in reverse.
If I woke up in your shoes tomorrow morning, I’d have
only $1,000 in debt before the coffee started brewing. Sell the
stock, and pay off the $5,000. Then, I’d formulate a plan,
get on a budget and fix that thing in my life called overspending
so that I could knock out the remaining debt in no time and start
Bank trust departments good or bad?
I was listening to your show recently, and you seemed to have
a bad opinion of bank trust departments. Why is this? For someone
who doesn’t have the knowledge to be their own trustee or
executor, the service they provide can be worth every penny spent.
I think you misunderstood. I don’t dislike bank trustees,
but my experience with them has led me to believe that there are
many other people who can do a better job in this area. They tend
to be ultra-conservative, moving money to CDs within the bank
itself, or the get just plain silly and act like they’re
a stockbroker doing day trading.
Instead, I’ve found that just general people in the population
– friends or relatives that have some business acumen –
make much better trustees. For that matter, most attorneys make
much better trustees because they don’t end up having conflicts
Now, there are a percentage of bank trustees who are truly excellent.
There are always exceptions to the rule. But the truth is there
are very few really good ones out there, and there’s no
chance in the world you’ll find a bank trust department
managing my estate when I pass away.
* For more advice on credit cards, debt and investments, go to
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