Dave Says

Wednesday, April 9, 2008 at 1:28am

Dear Dave,

I’ve been trying to talk my husband out of going into debt to pay for things for years now. His idea is that debt is normal and there’s nothing wrong with it, as long as we can afford the monthly payments. We can afford these payments right now, but I don’t think its OK and I’m worried about the future. I’d rather invest the money or save it instead of giving it to creditors.

— Annette

Dear Annette,

Well, your husband is right about one thing. Debt IS normal in this country today. But that doesn’t make it smart or OK. He was wrong, though, when he said you can afford the extra payments. Here’s what I mean.

On average, about three out of every 100 people in the United States are wealthy. By wealthy, I mean they make at least $200,000 a year and have a net worth of $1 million or more. I think it’s pretty fair to say that these folks aren’t normal. You might even say they’re weird when compared to everyone else.

Financially speaking, being normal in today’s society means being broke. According to The Wall Street Journal, 70 percent of Americans are living paycheck to paycheck. And did you know that 34 percent of the people who will retire this year will do so with an income of less than $10,000 a year? That’s scary! Can you see why I don’t want to be normal?

Here’s another little fact on why you can’t “afford” to make payments on stuff, even if you can meet the monthly requirements. The average car payment in America is $378 a month over 55 months. Do you know what would happen if you took that money and invested it in good growth stock mutual funds? That money, invested from age 25 to 65 would provide you with more than $4 million by the time you were ready to retire.

So, if managing my money properly and retiring with some dignity — and wealthy to boot — is weird, then I want to be the weirdest guy around!

— Dave

Dear Dave,

I just began a business with a friend as an LLC partnership. I know he’s honest and a hard worker, but I’m still a little scared that everything will fall apart and we’ll walk away mad at each other. We used a CPA to get a tax ID number and help us set up the company. Do you think we should pay a lawyer to help us map out the partnership agreement in writing?

— Mike

Dear Mike,

Drawing up a written partnership agreement may be the only shot you’d have at walking away from this venture with your friendship still intact. But I don’t think you need to hand some lawyer a bunch of money to make it happen.

Chances are, your new business doesn’t need that level of detail. All you need is someone to help you draw up a template that answers all the “what if” questions. This template can be as simple as a list of all the things that could go wrong and the answers to those scenarios. These would be things like death, disability, moral failure, bankruptcy, etc., and what happens if any of these occur.

You know, there are hardly ever problems in a business venture when everyone’s happy and making piles of money. But it can get rough if you begin to disagree over the direction the company is taking. Or what if personal issues make you decide you don’t want to be in business with the other person anymore? It’s easy to go all pie-in-the-sky over these things, but you have to make plans for any and all of the worst outcomes, too.

— Dave

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Filed under: City Business
By: courier37027 on 12/31/69 at 6:00

Hey Dave, ten years ago I bought some Beanie Babies . The QVC and Shop at Home people swore the value would increase. Then I bought a set for $6000. How much can I sell them for now?

By: gdiafante on 12/31/69 at 6:00

Dear courier,Probably nothing. That was a stupid investment. Don't be so naive next time.Dave