Dear Dave,

I just married a wonderful lady with two children. We’ve talked over our financial situation, and we’re determined to get out of debt within two years. This will mean some big changes in our teenager’s lifestyles. How can we break this to them gently?

Dan

Dear Dan,

Having your wife – who is also their mother – on board with the plan makes a big difference. I think all of you need to sit down and have a frank but loving discussion about the changes that are going to come with this marriage for everyone. The kids have to adjust to a stepdad being on the scene, just like you have to adjust to a marriage situation where teenagers are part of the package.

Let them know you don’t want to be the bad guy, but that you and mom have been looking at the money situation and things just don’t add up. It also wouldn’t be a bad idea if mom did a lot of the talking. Let her tell the kids that you’ve both decided it’s time to make the money behave, and this will mean some lifestyle changes.

Listen to reasonable input from them, and let them know their thoughts and feelings matter. But they also need to understand things are going to be different, and this part needs to come from mom. Otherwise, they’re likely to see you as the wicked stepdad!

— Dave

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The Investing Makes Her Nervous

Dear Dave,

My husband is into estate investment properties. He’ll buy a run-down house for very little money, fix it up and then rent it out. The debt we’re racking up makes me nervous. Each house has a loan, but he says it’s okay because we can sell them. Can you give me any advice?

Carol

Dear Carol,

I went broke years ago doing exactly what your husband is doing right now. I’ve known several others who went broke doing it, too. Lots of folks in real estate tend to believe that debt is okay so long as the property is worth more than the debt, but there are several down sides to that kind of thinking. At the end of the day, the borrower is always slave to the lender. And I’m afraid your husband may be on that path.

At best, this kind of thinking will make for lots of uncertainty. The worst case scenario has you guys ending up bankrupt, just like we did. My experience way back when is proof that things like this can quickly escalate out of control when you make debt one of your building blocks.

There’s nothing wrong with investing in real estate, but I recommend that he do it much more slowly – and with cash!

— Dave

* For more financial advice please visit daveramsey.com.

Dear Dave,

I’ll be starting college next fall. Is it okay to take out student loans if you have no other income to live on while you’re in school?

Mandy

Dear Mandy,

Wait a second! What do you mean you don’t have any other source of income to live on while you’re in school? Didn’t anyone ever teach you about a little thing called work? I worked 40 to 60 hours a week all through college, and I still graduated in four years. Nowadays, many people would call that child abuse. It’s absurd!

Don’t try to box me into a corner with the ridiculous notion that you have to take out student loans to go to college. You do not! Did you know that only 57 percent of people who start college actually graduate? That means 43 percent don’t. And guess what they have? Student loan debt and no degree!

Here’s what I want you to do. First, apply for every college scholarship you can find. Next, get a job! You may even have to take a couple of part-time jobs, but so what? Once you’re there, live in the dorm and eat dorm food, too. It won’t kill you. And a state college, where you can get in-state tuition, is always a good idea. If there’s one close by you can save even more money by living at home.

Is a college education important? Sure, it is. It’s a great thing, and I recommend going to college. But is student loan debt a necessary part of getting a degree and achieving success in life? Absolutely not!

— Dave

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Dave’s Thoughts On Pre-nuptial Agreements

Dear Dave,

My fiancé is from a wealthy family. The other day, her father suggested a pre-nuptial agreement. I’m not sure what to think about this. What’s your opinion on pre-nups?

Jeremy

Dear Jeremy,

It sounds like her family values its money more than it values their relationship with you. That could be a problem. If your bride-to-be feels the same way, then you shouldn’t marry her. In most cases there’s just a really bad spirit that goes along with pre-nups. It’s basically planning your divorce in advance. And in most cases, what you set your eyes on is what you’ll end up getting. One of my daughters just got married, and I never even thought of suggesting a pre-nuptial agreement.

There may be one exception to this rule. If you’re fiancé was already wealthy on her own, I might change my answer. Extreme wealth has a tendency to attract a whole lot of weirdness and dishonesty. I’ve even gone so far as to tell my wife to get a pre-nup if I die and she marries again. This is different than just the potential to be wealthy, like your case.

You can still have a wonderful marriage, even if you don’t see eye-to-eye with her family on this. But both of you need to be on the same page and of one mind. That’s why I think it would be a really good idea for you guys to address this before the wedding with a heart-to-heart talk and some pre-marital counseling!

— Dave

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Bogus Real Estate Offers

Dear Dave,

I’ve been seeing a lot of hand-made signs along the road here in Dallas lately. They say “Seeking real estate investor apprentice –$20,000 a month.” It also has a phone number listed. Do you know what this is about? It sounds too good to be true.

Jerry

Dear Jerry,

Of course it’s too good to be true! If someone’s offering a legitimate job making $20,000 a month do you really think they’re going to post it on a hand-made sign next to the road? I think your advertising budget will involve a little more than poster board and a stick if there’s really $20,000 a month involved. Give me a break!

It sounds to me like they’re trying to sell a questionable real estate seminar. A lot of these things are marketed as “real estate boot camps.” The premise is that over the course of a weekend they’ll teach you to buy and sell foreclosure properties. Some of them charge anywhere from $3,000 to $8,000, with the promise that if you follow the “guru” and his advice, then the “guru” will help you by buying the house with you. They’ll furnish the capital! Of course, seldom if ever do they even buy any houses, and if they do it’s the best possible deal that you might not want to share, anyway.

Anything that sounds too good to be true is too good to be true. It’s not any harder than that. Beverly Sills had it right when she said, “There are no shortcuts to anyplace worth going.” Becoming wealthy isn’t easy. It takes lots of hard work, sacrifice and the willingness to live on less than you make.

Even the Bible talks about this kind of thing. Proverbs 28:20 says, “A faithful man will abound with blessings, but he who hastens to be rich will not go unpunished.” Remember that, Jerry!

— Dave

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Time To Grow Up!

Dear Dave,

My husband and I have been married for about a year, and in that time we’ve been blessed with several financial gifts from our parents. We keep having this recurring discussion on how to use the money when it’s given to us. I came into the marriage with some debt we’re trying to pay off, but he feels like we should use this gift money like found money and have some fun. What do you think?

Katie

Dear Katie,

Unless the giver has very specific thoughts on how they’d like you to use the money, then it’s really up to you guys. If the giver wanted you to use it for something specific, though, they probably should have said so or just bought you the item in the first place.

Other than that, I think it’s time someone grew up a little bit and realized it’s not a birthday party when this kind of thing happens. It’s simply money that has come into your household—like a paycheck you’d get on the job, in other words. You don’t go out and blow $100 or whatever on toys or other fun just because it was handed to you by mom and dad. That’s how a 10-year-old behaves.

If there’s something you need, and you agree on it together and choose to buy it as a couple, that’s cool. I’ve got no problem with that. But you guys are just starting out, and you’ve got debts to pay. I’m sure he’s a good guy, but it’s time for him to start acting like an adult about this stuff and work with you on getting your financial lives in order!

— Dave

* For more financial help please visit daveramsey.com.

Dear Dave,

When, if ever, should your baby emergency fund be more than $1,000? Is there ever a scenario in which it should be less?

Sue

Dear Sue,

I always recommend that people who make $20,000 a year or less start out with a baby emergency fund of $500. Almost anyone can scrimp and save up $500 in a short amount of time, and this makes it easier for folks who don’t make a lot of money to have a safety net in place.

Is there a scenario where the baby emergency fund should be more than $1,000? I guess if you were stuck in a situation where you had $200,000 in debt and made $60,000 a year, you might want to ratchet that amount up to $2,000 or $3,000. The reason? It’s going to take you several years to dig your way out, and that means you’re taking a chance on several years worth of emergencies!

If you’ve got a really unstable situation—like there’s a good chance you might lose your job—or an emergency already pending, you should delay starting the Baby Steps and pile up a bunch of cash. In a case like that, it just wouldn’t make sense to start a financial overhaul and be sitting there with only $1,000 in the bank. If there’s a nasty storm coming, you need to work, work, work to get ready, and make sure you’ve got the biggest umbrella you can get!

Then, after you get past the bad stuff, you can push “play” on your Total Money Makeover. That’s when you’d pull your savings back down to $1,000 and go into attack mode on your debt!

—Dave

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Unmarried Couples Combine Finances?

Dear Dave,

Do you advise unmarried, long-term couples to combine finances to follow your plan, or should they move forward financially on an individual basis?

Ashley

Dear Ashley,

I always answer questions like this based on what I would do in the same situation. I know the statistics on unmarried couples who live together, and the numbers show most of them don’t stay together. I’m not trying to be mean, but I want you to know the truth.

Combining your finances when you’re not married could be a disaster. Pretending you’re married, but trying to keep your finances and other areas of your lives separate doesn’t work, either. I’ve been doing this for a long time, and I’ve met with an awful lot of couples in your situation. So, here’s my advice to you, Ashley. If you love this guy, and he loves you, then you need to get married. You may think that’s presumptuous, but you asked my opinion.

The idea that long-term, unmarried couples prosper financially and emotionally is pure mythology!

—Dave

* For more financial help, please visit daveramsey.com.

Dear Dave,

What’s the best way to respond to a sibling who continually makes poor choices with money and often asks to borrow money? I don’t want to be heartless, but they’re out of control asking for money anytime they want. I’m currently on Baby Step 2 of your plan, and I’m six months away from being debt-free. Do you have any suggestions?

Jen

Dear Jen,

I think you should just tell them the truth. You’re trying to get out of debt, so you don’t have extra money sitting around. Let this sibling know that you’re working hard to change the way you handle your money. Let them know, too, that part of that is you’ve decided debt is dumb, so you don’t borrow or loan money anymore.

Make sure you do this with a kind spirit, Jen. You could even let them know you might consider giving them some money as a gift if you had any extra lying around and you knew they were in control financially. But you’re not really helping someone who’s incompetent with money when you give them cash or even loan them money.

You’ve got to look at the big picture in situations like this. You’re not helping someone if you participate in their misbehavior with them. Sometimes you have to love somebody enough to tell them the truth, and that can mean saying no and telling them to straighten up!

—Dave

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It’s Not Worth It!

Dear Dave,

I want to keep one of our credit cards open and use the bill-pay option for utilities and other monthly bills. I want to do this so we can continue earning rewards points, and the way I look at it, we’d just be re-routing the money and paying it off every month. My husband doesn’t like this idea and thinks we should get rid of them all. Am I just asking for trouble by wanting to keep the rewards card open?

Cheryl

Dear Cheryl,

Yes, you are. Life never works out exactly the way you think it will. You can make all the well-reasoned and best-intentioned plans you want, but sooner or later that snake is going to bite you.

The only thing I’d consider in a situation like this is a debit card that has a rewards system attached. Lots of debit card programs offer the same kinds of rewards programs offered by credit card companies, with one big exception—you don’t have to go into debt!

You need to stop chasing these stupid brownie points. According to Consumer Reports, 78 percent of credit card airline miles are never redeemed. Studies also show that people spend more when using credit cards as opposed to cash. That extra money you spent is money you could have been saving. So, where’s the reward? It’s a myth. It’s like trying to catch a unicorn.

Cut up the card and close the account, Cheryl. You don’t build wealth by using credit cards!

—Dave

* For more financial help, please visit daveramsey.com.

Dear Dave,

I’m about to complete Baby Step 3. I’ve been very intense about following your plan, but I was wondering if there’s ever any kind of frustration or letdown after you’ve come this far.

Rasheed

Dear Rasheed,

You’re right. The beginning three Baby Steps are very intense. First, you get $1,000 in the bank—$500 if you make less than $20,000 a year—for a beginner emergency fund as fast as you can. Then, pay off all your debts, except the house, from smallest to largest, and after that you finish out your emergency fund with three to six months of expenses. This is a real whirlwind of activity because everything should be wrapped up in an aggressive, we’ve-got-to-get-this-done kind of attitude.

I guess if there’s a letdown it could come from the feeling that once you’re out of debt except for your house, things should kick into overdrive and you’ll become instantaneously wealthy. That just isn’t realistic. But it does remove a ton of stress from your life, and you’ll experience a sense of freedom that you’ve never felt before. Just think about it. Try to imagine how it would feel to have no payments on anything except your home. There’ll be no more credit card bills and no more car payments. How great is that?

As for frustrations, they’ll be fewer because a huge cause of stress and frustration will disappear after you gain control of your money and get out of debt. You may feel like things aren’t moving fast enough, but things never seem to move fast enough when you’re intense and really into what you’re doing!

—Dave

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Best Gift For the Grandkids?

Dear Dave,

What’s the best financial gift for young grandchildren?

Anonymous

Dear Anonymous,

Well, it’s definitely not savings bonds. You get nothing in the way of a return from those things. I get mad just looking at them! I’d suggest opening up an Educational Savings Account (ESA) in a mutual fund in the child’s name. You can put up to $2,000 a year, per child, into these, and they grow tax-free.

If you started when your grandchild was born, and set aside $2,000 a year for 18 years, you’d have saved $36,000. But if you go the ESA route, and figure 12 percent average growth over that time, the kid could have about $126,000 waiting when it comes time for college. That’s a pretty sweet gift!

—Dave

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The Best Place To Put Savings

Dear Dave,

Where is the best place for me to put my savings?

Anonymous

Dear Anonymous,

Saving and investing are two things I talk about a lot. Investing is when you’re going to leave the money alone for five years or more. I’m talking about things like retirement, college planning or saving up to buy a house. For these things, I recommend good, growth-stock mutual funds. Make sure you’re looking at mutual funds that have stable track records of five to 10 years, and then spread your money across these four categories: growth, growth and income, aggressive growth, and international.

Now, when it comes to savings, I’m not really concerned with making money. Things like setting money aside for vacations, Christmas, or even an emergency fund fall into this category. One and one-half percent would be an incredible rate on a savings account right now, so you’re not going to get rich off anything like this. The idea is to park this money in a safe place, and keep it separate from the rest of your money so it doesn’t get spent on the wrong thing!

—Dave

* For more financial help, please visit daveramsey.com.

Dear Dave,

I have an idea for a small business I think is needed in my area. How do you feel about me keeping my current, high-paying job, and hiring a full-time manager to handle the day-to-day operations while I oversee things and handle accounting? If it doesn’t break even or better, I’ll just close it down. I look at it as being like buying or selling real estate while keeping a full-time job.

Ken

Dear Ken,

Really, this idea isn’t a lot like real estate. Real estate will run itself, for the most part, once you find a tenant. Also, the number of hours you’d have to put into selling real estate on the side is nothing like the time you’d expend getting a new small business off the ground.

To be honest, I don’t think there’s a high likelihood of success using this model. Unless, of course, you’re willing to devote 40 to 50 hours a week to this new business, in addition to the time you spend at your current job. You’d have a better chance of making it work if you bought an existing business with a manager already in place. That way, at least you wouldn’t have to be so entrepreneurial and constantly involved in things like adjusting the business model, checking prices, and dealing with customers.

The secret ingredient to small business success is you. And the problem with your plan is that you’re only a small part of the equation. You are the energy, the ideas and the passion. You are the enthusiasm and the smile that greets the customers. Chains and franchises try to train this kind of stuff into people, but when something’s your baby, it’s really your baby. You’re going to worry over it, do your best to grow it properly, and treat it almost like it’s your very own child.

I’m sorry, Ken. I just don’t like this plan. If your idea is to swing by once in a while, eyeball things, and crunch a few numbers, then you’d probably do more good just giving the money you’d invest to charity!

—Dave

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Don’t Insure On a 1% Chance

Dear Dave,

I’m 54, my husband is 56, and we still have three teenagers at home. Recently, we were told that it’s the perfect time for us to buy long-term care insurance. What do you think about this idea?

Terri

Dear Terri,

My guess is that you were advised to buy this by someone who sells insurance. I’d also call this a conflict of interest!

If you’ll do a little bit of research, you will find that there’s about a one percent chance of folks your age needing long-term care insurance. So no, it’s not the perfect time for you guys to do this. I don’t insure things that have such a miniscule chance of happening.

Once you turn 60, the chances of something unfortunate happening rise practically every day. That’s why I advise people to start shopping for long-term care insurance on their 60th birthday, regardless of their income or assets. Think of it as a gift to yourself and your family. Nursing home care can run anywhere from $30,000 to $50,000 a year. That will crack and scramble most people’s nest eggs in a hurry!

Do you want long-term care insurance? Absolutely. But my advice is to wait until you’re 60 years old.

—Dave

* For more financial help, please visit daveramsey.com.

Dear Dave,

I make big commissions leasing cars, but I’d never lease one myself. Should I quit?

Stan

Dear Stan,

Yes, I think you should. I think you need to find something to do with your life that makes you feel proud.

I’m not saying you need to get out of the sales game, but find something that you could sell with great pride and joy—even to family or your best friend. Don’t just run out and quit today, though. Take a look at what’s out there, and start formulating a plan for some adjustments in your career track. If you can’t be proud of what you sell, or you wouldn’t buy it yourself, then you really don’t need to be selling it, do you?

I’m sure some people believe this is highbrow thinking, but it’s also a matter of honesty and the proper way to live your life. If you’re trying to get people to buy something you wouldn’t purchase, then basically you’re saying that you’re willing to lie to people just to make a buck. At the end of the day, it really is an integrity issue.

There’s an old rule called the Golden Rule. And I’m not talking about the one that goes, “He who has the gold makes the rules.” Do unto others as you would have them do unto you, Stan. It’s as simple as treating other people the way you’d want to be treated.

Find something to do with your life that you can do with excellence, pride and a sense of higher calling. You’ll make even more money over the scope of your life doing work you’re passionate about, instead of something that makes you feel like you’re ripping people off!

—Dave

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The Gold Bubble

Dear Dave,

I agree that historically gold is an extremely volatile investment. But wouldn’t it be a good idea to take advantage of this gold bubble and its popularity due to the market’s current hysteria?

Kevin

Dear Kevin,

A bubble is when an investment is no longer based on numbers, but on greed or fear. So, you’re right on about it being a gold bubble. That’s exactly what’s happening at this point. Now, should you take advantage of that? Absolutely not. You never know when a bubble will burst, but trust me—the bubble will burst on gold.

Here’s what happens during a bubble, using the real estate market as an example. Several years ago, Las Vegas was the fastest growing city in North America. People were drawn by the flashing lights and the commercials. Most of them didn’t know the city had a vibrant, legitimate economy without all the gambling and glitter. There was a gold rush mentality when it came to buying property, and an irrational level of excitement drove the prices. In the end, it was a lot like playing musical chairs. The music stopped, and lots of folks were left without a seat. Someone gets booted every time!

A lot of this stuff about gold comes from the foolish idea that it’s the standard the world is based upon. This simply is not true. Gold is not the standard that wealth is based on, and it hasn’t been since the days of the Roman Empire. Gold has no intrinsic value. As a matter of fact, silver is probably a better investment. It’s being used like crazy in manufacturing for microchips and other products, and because of this has an actual mechanical, utilitarian value.

I work way too hard for my money to mess around and see it disappear in the blink of an eye. That’s why I don’t mess with bubbles. When it comes to investing, I want to be the tortoise—not the hare. I’m going to invest in things that are steady, slow, and have long track records of success!

—Dave

* For more financial help, please visit daveramsey.com.

Dear Dave,

We have a special needs child, who will likely be under our care for the rest of her life. The doctors say there’s a good chance she’ll live to be about 40. We just finished Baby Step 3 of your plan, and have three to six months of expenses in our emergency fund. How does the situation with our little girl affect our retirement planning and college funding?

Jonathan

Dear Jonathan,

It really doesn’t affect anything. I know that sounds a little weird, but the only financial difference is that you’ll be responsible for your daughter for the foreseeable future—not just until she’s 18.

So, what’s the next step? If you don’t have it already, both you and your wife should buy term life insurance. That way, your little girl will be taken care of in the event of your deaths. Also, make sure the money from this is set up in your will to go into a special needs trust that would be managed for her care.

In the meantime, keep following the plan. Baby Step 4 is putting 15% of your income into pre-tax retirement plans, like Roth IRAs and mutual funds. Baby Step 5 is college funding, followed by paying off your home early. Then, of course, the last Baby Step is building wealth and giving.

Basically, you’re looking at filling a need in the event of your deaths, and this will be covered either by life insurance or investments. If you reach a point where your investments are substantial, and money from those things can adequately cover her needs or the needs of your family, then you can drop the insurance policy. That’s one of the cool things about building wealth. It negates the need for life insurance, because you’re self-insured!

God bless you guys, Jonathan.

— Dave

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Currency Investing is Ludicrous!

Dear Dave,

What do you think about investing in the Iraqi dinar? According to the information, you get $250,000 in dinar for just $250. Is this a good idea?

Tiffany

Dear Tiffany,

This is the dumbest thing to come along in years. It’s borderline on a scam! A lot of military folks have fallen for this, and there are ads all over the internet for the stuff.

Buying and selling currency of any kind, whether it’s the yen, the pound, or the Euro, is ludicrous. Playing around with currencies is a great way to lose your entire investment in the blink of an eye. Add to that the fact that Iraq is an extremely unstable, war-torn country, and it makes it one of the dumbest things you could ever do with your hard-earned money.

Don’t do it, Tiffany. You might as well just throw your money out the window while you’re driving down the road. At least then you’ll get a laugh watching everyone go wild trying to pick it all up!

— Dave

* For more financial help, please visit daveramsey.com.

Dear Dave,

My husband lost his job a few months ago. He’s found another one since then, but we’re still trying to rebuild our finances. At the same time, our daughter plays softball on a travel team. It’s a great character-building experience, but the costs involved can be pretty high. Do you think we should cut down on the travel team activities for a while?

Natasha

Dear Natasha,

You’re right. Playing sports can be a great part of the character-building process. But she can learn character lessons playing in a softball league at your local park. She doesn’t have to travel all over the place to learn those kinds of things.

If you have kids, there’s a pretty good chance you’re going to spend some money to help encourage their hobbies and interests. That comes with the territory, and it should be a fun and rewarding experience for everyone. You just have to take a look at your financial situation—and the kid’s desires and abilities—and make sure it’s a reasonable amount of money.

In your situation, playing on a travel team right now is a luxury. You don’t need to be footing the bill for hotel rooms and gas and stuff while you’re trying to get back on solid ground financially. Chances are, this child is not going to make a living playing softball. Even if she is that good, she can still sharpen her skills in a home town league until you guys are back on your feet.

I’m not opposed to kids playing on these kinds of teams per se. But you can’t allow the cost and time involved to undermine the needs of your family or blow your budget!

—Dave

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Dave Explains Paying Off The House

Dear Dave,

My wife and I are following your plan, and we’re in the middle of paying off our debts using the debt snowball. When we told my mother-in-law that by doing this we’d be able to pay off our house within 10 years, she told us that would be a stupid move. She couldn’t give us a reason why she thought it was stupid, but we couldn’t convince her otherwise. How can we explain things to her?

Jason

Dear Jason,

Okay, she’s telling you it’s a bad idea, but she has no idea why it’s a bad idea? It sounds to me like she’s the dumb one if she thinks you should behave a certain way, but can’t even tell you why. If someone can’t tell you why they have an argument against something, then they have no argument in the first place!

A lot of talking heads think it’s smart to not pay off your home. They’ll tell you things like it’s better to borrow money against your house and invest it in the stock market. What they won’t tell you is that there’s virtually nothing there by the time you adjust for risk and taxes. Why in the world would you take a chance on losing your home over something like that?

Another line they’ll throw out is that you don’t want to lose your tax deduction. This one’s really silly! If you have a $200,000 loan at five percent interest, you’ll pay about $10,000 a year in interest. Now, let’s also say you make $70,000 a year, and you’re in the 25 percent tax bracket. That $10,000 tax deduction is saving you $2,500 in taxes. In essence, you’re sending $10,000 to the mortgage company to keep from sending the government $2,500. That’s pretty stupid! You’d be better off to be debt-free and give $10,000 to some charity or your church. That way, you’ll save on taxes and do some good with the money.

By paying off your home, you decrease risk and gain a ton of security!

—Dave

For more financial help, please visit daveramsey.com.

Dear Dave,

Do you feel that some people are born leaders, or do you have to read and study to become one?

Michael

Dear Michael,

I don’t believe anyone is born a leader. I’ve watched all three of my kids being born, and not once did the doctor say, “Congratulations, Dave! You have a little eight-pound, six-ounce leader!” No, I believe people make choices.

I’m 49 years old, and I’ve been studying leadership ever since I opened my company almost 20 years ago. I was really awful when I first started. I made so many bad, dumb mistakes! But I’m a world-class leader now. I’ve learned how to do this stuff, and its taken thousands and thousands of hours of reading and studying and lots of experiences—both good and bad—to get to this point. It’s also meant having to realize that I don’t know everything and taking time to examine my mistakes and learn from them.

Malcolm Gladwell wrote a fabulous book called Outliers. In it, he studied people who are unusually successful. In the process, he discovered that while some people may have a natural predisposition toward some areas, the key was they took the gifts they had and then practiced and studied for thousands of hours to turn their gifts into world-class talents. In other words, these people made choices, and their “talents” were really acquired skills.

This stuff doesn’t just occur. You’re not a born leader any more than you’re a born football player, actor or musician. You may start with a gift, but you have to make a choice to work your tail off if you want to develop that gift to its fullest potential!

—Dave

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Should I still budget blow money?

Dear Dave,

I’m following your plan and trying to get out of debt. Should you have a “blow money” category in your budget before your debt is paid off?

Luke

Dear Luke,

You bet! The key is to make that category very, very small. You shouldn’t run around spending money on all kinds of fun stuff when you’re trying to get out of debt. I want you to be really focused—gazelle intense—when it comes to getting out of debt. If you reach this level of intensity, there’s naturally going to be less wiggle room in your budget, because you’ll be squeezing out every dime you can find to kill the debt!

Keep in mind that I’m not saying you can’t have any fun at all when you’re getting out of debt. But keep that category very small. We’re talking about extreme sacrifice for a short period of time. I know it can be tough, but trust me—it’s worth it!

—Dave

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Why should I adjust it?

Dear Dave,

We got a big income tax refund earlier this year, but I heard you tell someone to adjust their tax withholding so they don’t get a refund. Why should you do this?

Justin

Dear Justin,

Let’s say you get a $3,000 refund. Do you know why you got that refund? It’s because you had $250 too much taken out of your paycheck every single month during the past year. Basically, you loaned the government $3,000 of your own money interest-free for 12 months. A refund isn’t free money, Justin. It’s your own cash that you get back because you paid in too much during the previous year.

Believe it or not, Santa Claus doesn’t live in Washington, D.C. There’s no free ride! So rather than loan the government money that you earned and worked hard for, how about bringing it home and using it to get out of debt and get control of your finances?

—Dave

* For more financial help, please visit daveramsey.com.