Dave Says

Friday, July 25, 2008 at 4:02am

Dear Dave,

My husband finished dental school three years ago. Recently, he told me he wants to go back to school to become a dental anesthesiologist.

He makes $100,000 a year right now but says this will give him the potential to double his income. We’ve paid off five credit cards in the last year and a half, but we still have a $200,000 student loan.

We also just found out that I’m pregnant.

So, I’m feeling unsafe with this idea. What do you think?

— Shannon

Dear Shannon,

This is not a wise move. You’re $200,000 in debt and he brings in dentist money. You guys need to clean up your debt.

This starts by living on nothing for a while. If he makes $100,000, you guys need to live on half that. We’re talking rice and beans and living on a very tight budget for a couple of years. If he wants to go back to school after that — and save up money to pay for it — we can sit down and talk.

You have every right to feel unsafe right now, Shannon. I’m sure your husband is a great guy and that he loves you very much. But this is a ridiculous idea.

He needs to listen to his loving, pregnant wife. You’re right on this one and he’s wrong. Period!

— Dave

Dear Dave,

I’m 61 and on disability. My home is paid for and I have about $1 million in assets. I try to spend no more than four percent of the principal each year.

My current car needs repairs, but the cost would be more than the car is worth. I’m looking at getting another vehicle and was wondering, given my situation, if it would be better to lease, finance or pay cash.

— Linda

Dear Linda,

I’m proud of the way you’ve handled your money. You’ve got the right attitude about wealth building, but the wrong idea about car buying.

There not a chance on the planet that I’ll tell you to go pick up a “fleece” or payments on a car. You’ve got a great thing going for you — a peaceful, calm and successful financial life. Why would you want to mess all that up with a lease or payments?

Here’s the deal: Consumer Reports and my calculator both say that leasing a car is the most expensive way to operate a vehicle. It’s a rip off! Dealerships make more money off leases than they do from the sale of cars.

I’m okay with you buying a car. You’ve managed your money well and you’re in great shape financially. But when it comes to the big shiny things, pay cash or don’t buy it!

— Dave

Dear Dave,

Does having supplemental insurance make good financial sense?

— Anonymous

Dear Anonymous,

Some of it does under the right circumstances. But you have to be very careful when choosing these products because there are lots of companies out there trying to sell you stuff that doesn’t make good financial sense.

One example is short-term disability insurance. I would not do that. Another example is cancer insurance. I wouldn’t do that, either. But they also sell good stuff like long-term disability insurance. That’s something you really need!

Beware of the little gimmick insurance plans, too. Those six-dollar-a-month things are not a good idea!

— Dave

For more financial advice plus special offers,

please visit www.davesays.org or call 1-888-22-PEACE.

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

I disagree about short term insurance. I have it. Not all of us have 6 months of pay set aside to live on. I will have used mine 3 times since I have bought it. The first time was just about months into the plan, then last October, and now I am currently using it again. All for separate illness,injurys. I have 60% of my base pay. This will allow me to keep my health insurance and my other insurance policys, including the short term and long term disability. By the way, long term is frequently only good for 2 years. When you have major bone fractures,cancer, or other problems that keep you from being 100% you will wish you had it. My job requires me to be 100% without restrictions. Only if it is a workers comp, does one work at less than 100 %. At that time your short term disability and such would not kick in. Having a cancer supliment that pays by the day that you are IN THE HOSPITAL is not good. Most people do not stay in the hospital to treat their cancer. It is done in the doctors office. So think about it. What does your job require from you? I am SO GLAD that I bought my insurance.