Dave Says

Friday, May 2, 2008 at 4:21am

Dear Dave,

We have 90 credit cards in a safe deposit box, and they all have zero balances. I know you say we don’t need credit, but I’d really like for us to keep our credit rating intact.

My husband and I both own our own businesses, and I like the security of knowing they’re there in case something bad happens.

Is this OK?

— Brenda

Dear Brenda,

Are you kidding me? No, it’s not OK!

Ninety credit cards in a safe deposit box is NOT security! Girl, I am seriously scared to death for you guys right now. You are an identity theft disaster just waiting to happen.

The best safety net you can have is a fully funded emergency fund of three to six months of expenses. I’m talking about lots of cash just sitting in a good money market account for a rainy day.

Find a shredder, Brenda. And when you do, I want you to take every one of those 90 credit cards, toss them in and fire that sucker up! It’s time for some serious plastic surgery!

— Dave

Dear Dave,

How do you feel about giving companies electronic access to your bank account? I have my electric bill auto-drafted every month, but I’m afraid to give this information out to just anyone.

— Mark

Dear Mark,

You’re right to be careful about who you allow to have access to your personal account. I let folks have access to my account for normal, recurring things. I pay my utilities that way, have money auto-drafted to be put into mutual funds and stuff like that. What I warn people about is when they have an adversarial situation with someone like a collector or credit card company.

We had a situation here not long ago where someone owed a credit card company $1,500, and they gave them electronic access and permission to take out $1,000 toward paying off the debt. The collector then went ahead and took $1,500 – cleaned them out! And if something like that happens, what can you do? If you take them before a judge and it comes out that you owed them $1,500 and they took $1,500, you’ll get laughed right out of the courtroom.

NEVER give collectors or credit card companies electronic access to your personal account!

— Dave

Dear Dave,

I’m a newly single mom who is about to start receiving child support payments of $430 a month. I’ve also just started on your plan to help manage my finances. Should I use some of this money to help payoff debt and start saving — something I feel weird about — or to start a college fund for my kids?

— Erin

Dear Erin,

I don’t think you should feel weird about anything. First, the savings will be in place to help take care of your family. I would even suggest that at least some of the debt you’re talking about is due to the fact that you’ve been supporting children. Once you’re out of debt, you’ll have even more money available to do other things for them — like saving for college.

Let me ask you something. While you’re doing this are you also going to be buying electricity and food for the kids with that money? Of course, you are! Are they going to be wearing clothes that you bought for them when you burn gas driving them to ball practice? Sure they are!

Let’s go one step further. What if you were able to build an emergency fund while you put this money directly into your budget like the extra income you’d see from a part-time job? Then, what if one if one of the kids had an emergency? You’d use it to take care of them and support them, wouldn’t you?

I think you’re a good mom. You’re not stealing or embezzling your children’s money, Erin. There’s just something about it coming in with the label “child support” that can make a good parent feel like they’re cheating their kids.

And in a situation like this, the truth is that you’re taking care of them now and in the future!

— Dave

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Filed under: City Business