Iíve followed your plan for three years. Iím living totally debt-free except for my home, and I pay for everything with cash. Itís so freeing! Iíd like to convince my family to stop using credit cards and follow your advice too. How can I do this?
It does feel great, doesnít it? Congratulations! Iím really proud that youíve worked hard, been disciplined, and taken control of your money.
When it comes to your family, however, Iím not sure that words will do the trick. Thereís an old saying, ďThose convinced against their will are of the same opinion still.Ē Some people are just stuck in their ways and have been brainwashed into believing that credit cards and debt are an unavoidable part of life.
Trust me, I know what Iím talking about here. Iíve been fortunate enough to help millions of people change their lives, get out of debt, and take control of the finances. But there are millions more who just wonít listen. They just keep going deeper and deeper into debt. As much as I want to help people, I had to accept the fact long ago that being stupid with money isnít illegal.
You can make some irrefutable arguments against credit cards. You donít need them to get a hotel room, rent a car, or buy airline tickets. A debit card will do all of that without piling up debt. For an emergency fund, you can simply save up cash. It takes some discipline and hard work, but relying on credit when things go wrong is a trap.
If they wonít accept these points, try telling them your story. Donít leave out the part about old habits being hard to break, but stress how great your life has been ó both financially and emotionally ó since you made the decision to control your money. Maybe a light will come on, and you can walk them through the process!
Forced to contribute
I work for the police department, and Iím required to contribute nine percent of my paycheck toward my pension. I know you recommend putting 15 percent toward retirement, so I was wondering if I should put an additional six percent into this plan or go with something else.
Your pension is probably pretty stable if you work for a police department, so if you feel good about your position and the returns youíre seeing, Iíd be OK with you putting the extra six percent there ó maybe even a little bit more.
If youíre feeling iffy about the pension, Iíd recommend putting the remaining six percent in a Roth IRA invested in good growth stock mutual funds. Make sure these funds have strong track records of at least 10 years.
Iím glad to know youíre serious about saving, Brian. By planning for the future now, you can look forward to retiring with wealth and dignity!
ó Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.
Dave Ramsey: How do I convince family to cut up their credit cards?