Dave Says

Friday, June 20, 2008 at 2:28am
It’s OK, says Dave Ramsey, to give someone a piggyback ride, but never ‘piggyback’ on another person’s credit card.

Dear Dave,

What do you think about “piggybacking” on a person’s credit card so that their credit score can go up?

— Tony

Dear Tony,

That is one of the worst things you could possibly do. It’s a really bad idea. It’s dumb. Am I being clear on this?

Want to know why it’s such a bad idea? If they don’t pay, YOU get to fork over the cash. What a wonderful privilege and opportunity! And if someone’s finances are in such bad shape they want to run on your credit, chances are they aren’t going to pay and you’ll get stuck.

Besides, you don’t want to run up your credit score, anyway. Do you know what your credit score really is? It’s your “I Love Debt” score. The only way you get a big FICO score is to get in debt, stay in debt and make a lot of debt payments.

Don’t do it, Tony!

— Dave

Dear Dave,

We just received a small inheritance of $5,000. We have about $21,000 in debt, and one of the creditors is calling every day because we aren’t current with them.

Do you think we should go ahead and start the Baby Steps or deal with this guy first?

– Laura

Dear Laura,

Let’s get current before we start the Baby Steps. That way, you can focus on getting out of debt without someone hounding you all the time.

Once you’re current, get $1,000 in the bank for an emergency fund as fast as you can. Then, start on your debt snowball and pay off all of your debts – except for the house – from smallest to largest. Make sure you’re doing a written monthly budget to help you stay on track, too. On paper, on purpose before the month begins.

I’m proud of you guys, Laura. Taking control of your money instead of letting it control you is the first step toward financial freedom!

— Dave

Dear Dave,

We don’t have a lot of debt. Right now it’s just the house and a student loan of about $9,000.

My father just asked if I wanted to buy his boat. We talked it over, and I could take the cash from my spending money each month and pay him. Would this be OK?

— Robert

Dear Robert,

I can’t believe you just asked Dave Ramsey if it’s OK to have a boat payment. I’m the guy who yells NO DEBT all the time, remember?

Basically, what you’re talking about here is going into debt to your dad to buy a boat. I love boats and being out on the water. If I were going to cave in on anything, it would be a boat. But there’s not a chance in the world I’m going to tell you it’s okay to have a stupid boat payment!

In this kind of situation, you’d be taking on more debt PLUS it would create an awkward situation with your dad. It doesn’t matter if the debt is to a finance company or a family member. The borrower is always slave to the lender, Robert. Trust me, that Fourth of July cookout would taste and feel a lot different if you were sitting down with your master instead of just plain old dad.

Having a boat is really cool and lots of fun, but first things first. Get out of debt, then save up!

— Dave

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