Dave Says

By Dave Ramsey
Author, The Total Money Makeover

CBN.com – Financial guru Dave Ramsey answers questions about wise financial decision-making.

Credit Complications

Dear Dave,

What can you do when your credit is so bad that you can’t even rent an apartment? I make enough money now to afford one, but my credit history is so bad, no one wants to rent to me.

-- Ryan via email

Dear Ryan,

If your credit is in bad shape due to old, bad debts, the first thing you should do is systematically work through that list and clean them up. If you have outstanding debts, you have a legal and moral responsibility to repay them. Do a debt snowball, and make a list of all your debts from smallest to largest. Then, go to work paying off the smallest one first and work your way up the list. Wake one monster up at a time. Otherwise, you’ll have a real zoo on your hands.

Now, if you’re on the verge of being homeless and need a place to live immediately, find someone who will sit down with you and listen to your story. More than likely, this will be an individual, not a company, who owns an apartment or a house. Explain to them that you made some bad decisions earlier in your life, but that you’re making good money now and can afford an apartment. Find someone you can convince that you’ll be a good tenant in spite of the fact that your credit record is banged up, and that you’re working hard to pay off what you owe. Good luck, Ryan!

-- Dave

The Dangers of Day Trading

Dear Dave,

Why do you disapprove of day trading? I’m thinking of doing it full-time for a living.

-- Jeff in Milam, TN

Dear Jeff,

The answer is very simple – it doesn’t work. The Securities Exchange Commission (SEC) did a study when the market was booming, and that study showed 78 percent of day traders lost money. I mean, come on, Jeff. If statistics showed that eight out of 10 people in the restaurant business lost money, I wouldn’t tell you to open a restaurant!

Day trading is a game for the arrogant and proud who think they can beat the market. The only people making money in day trading are the firms that supposedly teach you how to do this garbage. There’s only one way to beat the market, and that’s to get in it and stay in it forever. Buy a good mutual fund and leave it alone for 20 years or more.

Don’t day trade, Jeff. You’re going to lose your butt. It’s a good way to ruin yourself financially, plus it can be addictive. Just a few months ago I worked with a lady whose husband lost $800,000 in one year. This guy burned up their entire life savings AND mortgaged their paid-off house to the hilt. Once he started, he just couldn’t stop.

Stay away from it!

-- Dave

Divorce Dilemma

Dear Dave,

I am an ordained minister, and it seems that you sanction divorce because of poor spending habits. The Bible lists abandonment and adultery as the only justifications for divorce. Where are you coming from with this stance?

-- Jack via email

Dear Jack,

You haven’t heard me tell anyone to get a divorce. Divorce is a terrible thing and a scourge on our society. I tell people to get divorced about as often as I tell them to file bankruptcy. In other words, I don’t.

I agree with you on the issues of adultery and abandonment being biblical grounds for divorce. But let me ask you this; if you have a situation where a guy is beating his wife and she divorces him, which one of those is it – abandonment or unfaithfulness? Or is it neither one? It’s abandonment because he has emotionally left his wife AND his biblical mandate to serve and care for her.

In these kinds of cases, I can understand why someone would want a divorce. But I have never told someone to go out and get a divorce, Jack.

-- Dave