Dave Says More Than Just a Credit Card Problem

Townhall.com ^ | February 13, 2013 | Dave Ramsey

[Kaslin]

Dear Dave,

My mother-in-law has a serious credit card problem. She can’t afford stuff, but she shops anyway, acquires more and more credit and thinks she’ll pay for it all later somehow. Her husband has bailed her out a few times, but he’s unwilling to do it anymore. My wife and I, and her sister, want to address this issue, but where do we start?

Jonathan

Dear Jonathan,

First of all, you need to stay out of the discussion. This is something for her daughters to handle, and her husband needs to be part of it, too. He’s closer to this and feels the effects more than anyone else in the family.

They need to sit down with her in a closed setting, where there are no interruptions, no television and no one else. Start with the fact that they love her and care about her deeply. This part is really important. But they also have to walk through what’s going on, and let her know they’re tired of watching her destroy herself and her marriage with this immature and irresponsible behavior.

Everyone involved should understand going in that they’re likely to receive a volatile, angry reaction from this lady. Sometimes people get ticked off when they hear the truth, especially when it’s connected to their own misbehavior. It may even be a good idea for your wife, her sister and your father-in-law to get some advice from a family counselor beforehand. What we’re really talking about here is an intervention.

If she were a drunk, you’d want to try and make her see how alcohol was hurting her and the relationships she has with her family. Basically, she has a credit cardaddiction, and it’s wreaking havoc on her marriage and their financial well-being. Show as much love and understanding as possible, but someone has to say something and draw a line in the sand. Otherwise, this behavior will eat everyone alive!

—Dave

Dear Dave,

I want to get out of my whole life policy. Should I formally close out the old policy, or just stop paying the premiums?

Anonymous

Dear Anonymous,

Close out the old policy once you have a good, term life insurance policy in place. I recommend 15- to 20-year level term insurance equal to 10 to 12 times your annual income. For instance, if you make $40,000 a year, you should have $400,000 to $500,000 in coverage.

Term life insurance is much less expensive than whole life. Plus, did you know that you lose the part of your whole life policy known as the “savings plan” or “cash value” when you die? They only pay the face amount of the policy. So, close it out and stop pumping money into that thing!

But don’t leave yourself uninsured. Make sure you have the proper coveragein a term policy first. There is never a good time to save money inside a rip-off, whole life, cash value insurance plan!

—Dave

[CSM]

Dave Ramsey ping!

[jwsea55]

First of all, you need to stay out of the discussion.

Ramsey tells him to stay out of the discussion and then tells him what to do?

[absolootezer0]

He missed the obvious solution..

Take her aside, look her square in the eye, and say, “your spending habits are just like obama’s”

[yorkiemom]

Ramsey tells him to stay out of the discussion and then tells him what to do?

I think the advice was for his wife. Good idea - don't want to make that mother-in-law relationship any more difficult ;)

[yorkiemom]

Take her aside, look her square in the eye, and say, “your spending habits are just like obama’s”

LOL - that would be perfect. Unless she is a liberal, then she'd never get it.

[DBeers]

Dear Dave,

The one we have been waiting for has a serious credit card problem. He does not create any wealth and can’t afford stuff, but he shops anyway, acquires more and more credit and thinks he’ll pay for it all later somehow with a ‘balanced’ approach that borrows and spends more and invests in education and green energy. Those that actually create wealth have bailed him out a few times, but they are unwilling to do it anymore. The wealth creators want to address this issue, but where do we start?

Two Percent.

Dear Two Percent,

First of all, you need not have a discussion. This is something that the one we have been waiting for needs to figure out all by himself. The only thing to do is stop lending money to him -stop feeding his delusion. He will have no choice but to stop spending even if he believes he should be able to.

[jwsea55]

I think the advice was for his wife. Good idea - don't want to make that mother-in-law relationship any more difficult

I wonder what Ramsey's marriage is like?

[jwsea55]

Take her aside, look her square in the eye, and say, “your spending habits are just like obama’s”

:-)) Perfect. Avoids any conflict.