My wife and I are trying to decide how to buy a new truck. We have a net worth of about $2.2 million, so we can afford to buy it outright. She thinks it would be smarter to get a zero-interest deal, put the money in an interest-bearing checking account, and just have the payments deducted each month. What do you think?
You’re certainly in good enough shape to absorb the butt-kicking in depreciation that comes with buying a new car. It’s not what I’d do, but I’ve got no problem with folks buying brand new vehicles with cash once they reach millionaire status.
It’s a great time to buy a truck if you can deal with the pain at the pump. The bigger ones are gas hogs, so prices have dropped way down. You should be able to save thousands of bucks right now.
Do some internet shopping, and really wear down the salespeople. Don’t just show up on one dealer’s lot and flash your cash. Then, when you find the one you want at a good price, cut a check and be done with it!
My small business has been very successful this year. I’d like to start a profit sharing program, but the company still has some debt. Should I wait until the debt is completely paid off to implement this idea?
I’m glad you’re thinking this way. Sharing with your team changes the very culture of the company. Your team will see the rewards of their efforts. In my mind, it’s an absolute necessity when it comes to winning in business.
Debt elimination is also a smart thing. When debt is out of the picture, your cash flow and profits increase and your risk is reduced. Plus, if you’re thinking about a profit sharing plan, it will give you more money to share with your team!
So, what you have here is two good ideas. Give both of them a shot! Find a balance between the profit sharing and debt payments, and see what happens. When your debt is paid off, you can increase the profit sharing because you’ll have more money to go around!
As a Christian, I always give to my church. I was wondering if you think it’s okay to also give to local causes, such as animal shelters, scholarship funds and other things.
Certainly, it’s okay. I think people should give to lots of different things if they’ve been blessed.
As a Christian, you probably know that you’re called to tithe. That means one-tenth of your income—off the top and before anything else—should go to your church. Beyond that, anything you give is an offering, which is over and above the tithe.
When it comes to offerings, our family picks several ministries and nonprofit organizations around the community and gives generously to them rather than sending small amounts to more places.
Giving is a lot more than just moving money from your wallet to the collection plate or a charity. It’s a matter of caring and realizing there are others who are less fortunate than you. Give freely of your money AND your time and talents, Ana. The more people you help, the more joy you will experience!
I’m about to buy my first home. My plan is to buy a duplex and rent out the other side to help pay down the mortgage quickly. A friend of mine wants to be my renter, but I’m worried that this could jeopardize our friendship. How do you feel about this kind of thing?
This can work, but the odds aren’t in your favor. You need to be really careful. When you do business with friends, you always face the risk of running into a situation that can damage the relationship.
Does this mean you can never do business with friends? Of course not. I do a lot of business with friends. But I make sure that the specific requirements of our relationship are laid out clearly, in writing.
It would be a good idea to make sure he understands that he has to come talk to you ahead of time if there’s even a chance that he might not make the rent one month. Most problems can be worked out, but you’re not running a charity. This needs to be emphasized in a kind-but-firm manner.
Sometimes friends have unrealistic expectations on both sides. The friend who’s renting may think he’ll get some slack on the payments, or the friend who’s the landlord may assume the renter will be a model tenant. These dangerous myths need to be addressed and ironed out before anything is signed.
You can make this work, Jaime. Just be straightforward, and make absolutely sure the rules are understood by everyone involved. Then, when you have to, enforce them!
My daughter is 19, and she has a spending problem. Although she works part-time while she’s in college and during summers, we’ve allowed her to get into the habit of spending half of what she earns, along with some of our money, on fun stuff. Do you have any advice on how we can turn this around during her last three years of school?
I think you’re probably going to see a pretty negative reaction when you cut this kid off, and you need to be prepared for that. I also think that cutting her off is the best thing you can do for her right now.
You need to sit your daughter down and have a long talk. Explain to her that she’s wasting a bunch of money—hers AND yours—and that’s not a responsible plan. I think you also owe her an apology for being an accomplice to this kind of thing and for allowing her to live this way for so long.
She’s going to experience some pain for a while, because she won’t be able to maintain the lifestyle to which she’s become accustomed. But you guys have to draw a line in the sand where money is concerned. Tell her that you’ll give her a set amount each month—along with some for college—but the rest is up to her. If she doesn’t earn the money for all the other stuff, then the other stuff doesn’t happen.
As part of this, show her how to make a budget. Make sure she understands how to keep track of how much money comes in and where it all goes. Make sure she understands, too, that if she calls home asking for more money, the answer is going to be no.
All this needs to firm, but loving. What you’re doing here, Lili, is having “the talk” with her and making sure she has the tools and the knowledge to make it all work. Then, you check up on her from time to time.
She won’t be able to change her habits in the blink of an eye, but by checking up on her, you can answer questions and help her work through things!
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