Dave Ramsey: Having goals helps in managing money

Dear Dave,

My wife and I are in our 20s. We have no debt and $50,000 in the bank. Our income is $90,000 a year, and we’re cautious to live on less than we make. Still, we can’t seem to get motivated to make a budget. How can we get inspired to do this?

— Isaac

Dear Isaac,

Two of the biggest motivators we have are pain and pleasure. Financially, you guys don’t have any pain. You’re killing it! So, we’re going to have to figure out something associated with pleasure.

I think you need to look for something bigger than money to push you. You guys need to ask yourselves, “What are we saving for?” On a bigger scale, ask yourselves, “What can we do with this money?”

It sounds to me like you both realize money can’t be the goal. And that’s a good thing. You guys are obviously smart, gifted people. I’m sure you have ideas and goals, dreams and desires. Talk about them and write them down. By doing this, you’ll be taking the first steps toward making these things reality. When you have something specific that you want money to do, it gives you a reason to make it behave.

My advice would be to use your talents and resources for the good of others.

— Dave

Dear Dave,

My husband and I work and live in an RV. The vehicle is paid for, and I’d like to upgrade to a larger one, but that would mean taking out a $30,000 loan. We have $30,000 in savings, including our emergency fund, and we make $55,000 a year. What are your thoughts?

— Renee

Dear Renee,

I think what you’re doing with your lives is kind of cool. But I can’t advise financing something that will go down in value as quickly as an RV. I wouldn’t even do it on the basis that it’s going to be your primary residence.

Let’s look at things from a different angle. First of all, I think your emergency fund is a little high. I recommend three to six months of expenses, and on a household income of $55,000, holding $20,000 in reserve would be a lot. If you kept $15,000 in the bank, that would leave you with $15,000. If you’re talking about a $30,000 upgrade, you’d only need to save up another $15,000.

See where I’m going with this? With a little patience and planning, you can have your upgrade in the not-too-distant future and still have the peace of mind that goes with knowing you have a reasonable emergency fund sitting in the bank.

— Dave

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