Dear Dave: I’m debt-free except for my house. I make about $120,000 a year, and I have a truck that’s worth around $33,000 and a car that’s worth $28,000. I don’t have an emergency fund, so I was wondering if I should sell the truck to establish my emergency savings.
Dear Eric: A good rule of thumb is to never have more than half of your annual income tied up in things that go down in value. You’re not quite there, but you’re close. And I love your idea of wanting to immediately establish an emergency fund. You never know what life is going to unexpectedly throw at you, and an emergency fund is great insurance against that sort of thing.
Here’s how I look at it. Nothing you’ve told me indicates that this truck represents anything being out of control. It’s an expensive truck, but it’s not like you make $30,000 a year and have a $33,000 truck. That kind of thing would be just plain stupid. But if you don’t need or want the truck — and you’re that passionate about having a big, instant emergency fund in place — then sell it!
Dear Dave: My husband and I are just starting to get control of our finances, but we have a problem. My dad has a habit of expecting us to buy things for him. I know he has money, but anytime he knows we’re going to the store, he gives us a list of things he wants. If he’s with us, he just throws things in the cart and expects us to pay. He acts like we have an obligation to do all this for him. I love my dad, but this has become annoying. What can we do?
Dear Christina: I know you love your dad, but he sounds like the kind of guy who doesn’t really respect boundaries. And these kinds of folks, as a rule, don’t like it when they’re suddenly confronted with them. Regardless, you need to have a firm but loving talk with your dad.
Let him know how much he means to both of you, but remind him that you and your husband are working hard to get into better financial shape. This means you can’t spend more than is absolutely necessary. If he’s hungry, have him over for dinner. If he just needs one or two small things, that’s not such a big deal. But you’re not obligated to pay his way just because he’s your dad.
Like I said, he may or may not like this conversation. He may fuss and throw a little fit, but at that point it becomes his problem, not yours. Chances are he’ll come around in a week or so, and after he gets over the embarrassment of it all, everything will be all right again.
You aren’t an unloving or ungrateful daughter for not letting him run all over you. Talk to him in a kind, respectful way. If you feel you can’t stand up to him alone, ask your husband to lend support or put a voice to your wishes. It’s important that you’re both on the same page with this issue.
Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.