Dave Ramsey: Tips for handling a child’s debt situation

Dear Dave,

My daughter is in her late 20s, and she has a good job making $50,000 a year. The other day, she told me she has $15,000 in credit card debt and has financed an expensive car she’s upside down on. Her apartment in Omaha costs $600 a month, and she is asking for help to get out of the hole. We tried to teach her how to handle money, but apparently it didn’t work. How do you think I should handle this situation?

— Cindy

Dear Cindy,

Here’s what I would tell her if she were my kid in that situation. First, I’m not paying for your problem to go away. I’d tell her to sell the car and get a cheap little beater. She’ll have to get a small loan to cover the difference, but it will rid her of a car payment. And hey, a little bit of debt is better than a whole lot of debt — especially when the debt is on something that’s going down in value. After that, she can get a part-time job and work her tail off until she cleans up the mess she made.

I know all this sounds harsh, but this girl had a good thing going and she screwed it up by being impulsive and immature. Think about it; she’s making $50,000 a year, and only $7,200 of that was going toward rent. Her taxes aren’t that much, so where’s the rest of the money going? I’m guessing a big chunk is being wasted on restaurants, goofing off and other stuff she doesn’t really need.

Let her wallow in it and worry about things for a while first, though. Then, if she’s willing to accept responsibility for her actions, and she starts working hard toward handling her money wisely, you might help her out once in a while. Every time she pays off $1,000, you could add $500 to the next payment. But I’d test her resolve first to see if she wants it badly enough.

— Dave

Dear Dave,

I’m 64, and I’ve been dating a 73-year-old man for four years. We’re talking about marriage, and we’ve been discussing finances. He’s retired, but I still work part-time even though I’m in pretty good shape financially. His plan, if we get married, is to give his house and his savings to his children while we live in my home. We’d still have his small pension, what I bring home and my savings, but I think he should invest at least half of what he has in our marriage and relationship. What do you think?

— Betty

Dear Betty,

So, his wealth goes to his kids and you get to feed and take care of him until he dies? In my mind, this is not a good plan.

I think what you’re discovering here is that this guy just doesn’t want to be lonely. It sounds, too, like he’s dipping into your wealth while all his stuff goes to his kids. I’d be a little frustrated with this idea if I were you. And I think the two of you need some premarital and relationship counseling before you take another step forward. Right now, you’re in third place behind his kids and his belongings.

I’m not saying he has to give everything to you, but you guys definitely need to have a serious talk and find a little balance. Right now, he’s clinging to everything in one way or another and not really offering to take care of you. In my mind, you need to be ready to take a bullet for someone when you want to marry them. And this guy hasn’t shown that he’s ready to put you first.

— Dave

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