Girlfriend in Bankruptcy Trouble

By Dave Ramsey
Author, The Total Money Makeover

CBN.com – Dear Dave, My girlfriend is thinking about filing bankruptcy. I’m pretty responsible with finances, but she’s in a terrible financial situation with a lot of credit card debt, an expensive car payment and a big, fancy apartment. Plus, she just quit her job because she didn’t like it anymore.

She’s been suggesting to me that if we move in together it will help solve her problems. My concern is that if we can’t handle our finances as individuals, what’s going to happen if we get together. Can you help?

-- Dino in Tampa, FL

Dear Dino,

This is someone to keep dating, not marry or move in with, and see if she changes her spending habits. You’d have a very tough life being married to this chick unless she makes some attitude adjustments where her money is concerned.

I can’t say if she’s technically bankrupt, but she definitely needs to move into a cheaper apartment and sell the car for starters. But bankruptcy’s not going to solve anything if she’s got a heart problem. By this, I mean if she buys stuff just to try and be happy with having stuff and living beyond her means in the process. Many people have the idea that they are what drive, or they are where they live. Those are heart problems, and that’s the way I was 15 years ago until I got some sense knocked into me by going broke. Then I realized I had to stop and make some changes.

Dino, this doesn’t mean that she isn’t worthy of your love or she’s a terrible person, but this girl’s got some growing up to do. Money matters aside, you don’t quit your job without a plan unless you’re being sexually harassed or abused or there’s some matter of principle at stake. Leaving one job for another is okay. The idea of deciding you just don’t like something, though, and walking away from it when you’ve got a bunch of bills is just plain irresponsible. You don’t jump off the dock until the boat is there.

Honestly, she’s probably not bankrupt, but there are some character issues here that need to be addressed. Hopefully, you two can do this together.

-- Dave

Debit Cards and Air Miles

Dear Dave,

I know you hate credit cards and the excuse of using them for airline miles. But what about some of the new programs that let you use your debit card for airline miles?

-- Chuck via email

Dear Chuck,

I don’t have a problem with these debit card programs, as long as you don’t change your spending habits to get the miles. Spending extra money just to rack up airline miles is dumb, especially when a Consumer Reports study showed that 78 percent of all airline miles are never used.

It’s great if you happen to accumulate enough airline miles to pay for a nice trip, but don’t fall into the trap of buying extra stuff just to bulk up on these things. Why spend your hard-earned money on something you don’t need just to try and get something you probably won’t use?

-- Dave

How much house can we afford?

Dear Dave,

I just got married about a year ago, and now we’re looking into buying our first home sometime in the next few months. We’re both 23-years old, and combined we bring home about $4,000 a month. We have no debt, and we’re saving up to make a 20 percent down payment. Is there a way to calculate how much house you can actually afford?

-- Chad

Dear Chad,

Well, a bank will let you qualify for anywhere from 50 to 100 percent more than you should buy. After years of financial counseling, we’ve found that you don’t want a house payment that’s more than one-fourth of your take-home pay. That way, you’ve got the money to save for retirement, for your emergency fund and the kids that might come along somewhere down the road.

In your case, you’d be looking at a house payment of about $1,000 a month. Calculate that on a 15-year, fixed-rate loan at about 6.5 percent interest, and you qualify for a loan of about $115,000. Chad, that amount will get you guys a wonderful first home. And think about this; you’d own that $100,000 home outright when you’re still in your 30s. How great is that?

-- Dave

Dave Ramsey is the bestselling author of The Total Money Makeover.