Dave Says

Monday, December 24, 2007 at 1:11am

Dear Dave,

I think we should save up and pay cash for things we want, but my husband says he doesn’t want to work all the time and not have anything nice. He’s always going out and making expensive purchases on credit and pushing us deeper and deeper into debt. I don’t know what to do.


Dear Sandra,

It sounds like your husband has gotten into the mentality some folks have where they think the only way they’ll ever have anything in their lives is by going into debt. It’s an old song and dance that sounds like this. The only way I’ll have a decent car is to have a car payment … the only way I’ll ever have anything nice is to go into debt … that’s just the way it is, a poor man can’t make it. Honestly, Sandra. That way of thinking just makes me sick!

I’ve been broke twice in my life, and I’ve been a millionaire twice in my life before the age of 40. I’m nothing extra-special, just a stubborn little guy who wouldn’t quit and refused to accept that way of thinking. If all you do is work, then the last thing you want is to be in debt to the banker and have big payments hanging over your head.

See if this little piece of information will get his attention. If he were to cut back just a little and make more conservative purchases, you’d probably have enough money to invest the equivalent of a car payment each month. The average car payment in North America is $378 over 55 months. If you were to invest this from age 25 to age 65 you’d have $4.4 million! Not exactly poor man money, is it?

You’ve got several issues on the table, Sandra, and they’re all very serious. One is that your husband is willing to make major, life-changing decisions without accepting your input. I’m a pretty opinionated guy, but I don’t make big financial decisions that affect my family without my wife’s agreement. This isn’t because I’m henpecked, it’s just common courtesy and respect to hear her insight on the matter. If she and I don’t come to an agreement on these things, then the deal’s dead and that works both ways. It’s just part of a good marriage. If your husband says he wants to buy a new car, and you don’t think it’s a good idea but he does it anyway – that’s wrong.

The second major issue is his mentality that the best way to be prosperous or appear prosperous is by going into debt. The paradox is that it’s exactly the opposite that causes you to be prosperous. When you get rid of payments you have the largest wealth-building tool in your life available to you – your income.

When all the money comes in and all the money goes out, there’s nothing to invest or save or buy nice things with. But it’s easy to do all that when you don’t have any payments.

- Dave

Dear Dave,

We were dummies and bought a timeshare years ago. We paid it off in three years, and always paid the maintenance fee up until about two years ago. Then we got a call recently from a collection agency saying we had a $3,100 balance. He said they’d take $2,000 and call it even. I tried to negotiate with him, but he wouldn’t budge. What can we do now?


Dear Carmen,

It’s a valid debt. You signed a contract promising to pay the maintenance fees, so I’m sure the contract is enforceable. If you tried to get by without paying it they could sue you and would probably win.

If I were you I’d call this collections agency back and settle up with the understanding that you’ll be released from any further obligation. Let them know that if they don’t agree that you’ll sue them on the basis of misrepresentation.

Fight them as much as possible over this, but if the agency or timeshare manager will let you go free for $2,000, then under the circumstances you’re getting a bargain. Don’t send them anything, though, until you get, in writing, a statement saying that upon receipt of the $2,000 you will be released from any and all future obligations and past obligations regarding that particular timeshare.

And make sure you send the money in a way that will provide you with proof of delivery, such as certified mail, FedEx or UPS.

- Dave

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