Too Old to Tackle Money Issues?

By Dave Ramsey
Author, The Total Money Makeover

CBNMoney.com – Financial expert Dave Ramsey answers these questions about financial planning later in life, low-limit credit cards, and car loans.

Senior Starts Debt Snowball

Dear Dave,

I’m in my sixties and have lived paycheck to paycheck my entire life. After hearing you, I’m living on a budget, almost have my emergency fund in place, and will be ready to start my debt snowball soon.

My friends and family think I’m crazy. They say it’s too late to make a difference. What should I tell them?

– Dale

Dear Dale,

You tell them that the only time it’s too late to start living on a budget and being smart with your money is when you’re no longer breathing!

I advise everyone – from college students on up – to start saving and paying off debts so they can build wealth later. Live like no one else so that later you can live like no one else. That message goes for you, too!

Right now, you’re in a position to be a huge inspiration to all your friends and a great example for your children and grandchildren. Make this happen, Dale, and you can change your family tree for generations to come.

Get that emergency fund built up, and even sell some things if you have to. Make it fun! Get excited, focused, and intense about this, and I promise you’ll see your financial life get better in a hurry!

– Dave

Low-Limit Cards: Best Way to Re-establish Credit?

Dear Dave,

I filed Chapter 7 bankruptcy a while back. The other day I saw an article in a financial magazine saying the best way to re-establish credit after a bankruptcy is to find a low-limit credit card, make small purchases, then pay it off early each month. I’d like to buy a home in a few years, so what do you think of this advice?

–Kim

Dear Kim,

Whoever wrote that article is crazy! It’s just about the worst advice I’ve ever heard.

Think about it. When people file bankruptcy, they do it because they got so far into debt they couldn’t get out. If debt has already pushed you into bankruptcy, don’t you think it means debt is something you should avoid?

Don’t worry about re-establishing your credit. If you go three or four years after bankruptcy without borrowing a dime, you’ll add no new entries to your credit bureau report. And this will show a potential mortgage lender that you got the point the first time. It means that you’ve got a little wisdom and you’ve learned from your mistakes.

The definition of insanity is doing the same thing over and over and expecting different results. Getting another credit card after all you’ve been through would be insane.

You can’t borrow your way to wealth, Kim. You need to change the behavior in order to change the results!

– Dave

Roll Car Loan into Home Loan?

Dear Dave,

We’re almost debt-free. The only things hanging over our heads right now are our house payment and a car loan. Would it be a good idea for us to roll the car note into our home loan so that we could deduct it on our income tax? We owe $6,100 on the car, and our household income is about $55,000 per year.

– Sylvia

Dear Sylvia,

I’d rather you just pay off your debts. You guys have all your others cleaned up, so just stay focused and knock out these last two big ones.

Remember, you’ve got to get a little righteous anger going on and make it a passionate, all-out priority. If you do that with $55,000 worth of income, you can make a $6,100 car note disappear in a flash!

Besides, in this situation any tax deduction is going be pretty small. The idea of some golden tax deduction is really just a mind game lenders play to get you to use their debt versus someone else’s. They say you’ll be sophisticated because it’s a tax deduction, but when you do the math, it’s barely enough to buy you a night on the town!

– Dave

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Dave Says 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.