Dear Dave,

Our son is 27, and he has a good job making $55,000 a year. Recently, we learned he financed an expensive car he’s now upside down on. In addition, he has accumulated over $15,000 in credit card debt. He lives in a small town, and only pays $650 a month in rent, but he is asking for money. We taught him about living on a budget and staying out of debt when he was younger, and now it seems he didn’t listen very well. How do you think we should handle this situation?


Dear Bryce,

The first thing I’d advise telling him is that you and his mom aren’t going to whip out the checkbook, and make his problems disappear. That may sound harsh, but he had a really good thing going until he messed it up by acting impulsively and irresponsibly with his finances. Nope, I wouldn’t take care of it for him — not at his age. This young man needs to have some skin in the game.

I’d tell him to sell the fancy car, and get something way cheaper to drive for a while. I’m talking about a little beater in the $2,000 to $3,000 range. It sounds like he’ll have to get a small loan to cover the difference, but a little car debt is better than a lot of car debt. I’d also advise him to pick up a part-time job nights or weekends until he gets that credit card debt paid off.

In other words, let him wallow in it and worry about things for a while. Then, if he’s willing to accept responsibility for his actions, and starts handling money more wisely, you two might help out every so often with a little extra cash on the payments.

But I’d test his resolve first. And I’d want to see proof he has learned from his mistakes!


Dear Dave,

I’ll be graduating from college in December, and I’ll have a job waiting for me that pays $50,000 a year. This will bring our household income up to about $95,000. The problem is we’ve got $18,000 in student loan debt, $2,500 in credit card debt, and $4,000 to pay in medical bills. We’re living in an apartment right now, so how should we handle this income increase regarding our debt situation?


Dear Mikayla,

Congratulations on your decision to get control of your finances and your degree! If you two just keep living the way you have been, minus the debt, and put the rest toward the debt you’ve incurred, you could be debt-free in a year or so.

Remember, just because you’ve got a lot more money coming in doesn’t mean you should double your entertainment budget, take an expensive vacation, or run out and buy a new car. The first thing I’d recommend is sitting down together, and working out a written, monthly budget. Give every dollar a name and a job to do before the coming month begins.

Don’t forget the debt snowball, either! List all your debts from smallest to largest, and attack the smallest—that credit card debt—first with a vengeance, while making minimum payments on the medical bills and student loan debt. Once you’ve paid off the credit card debt, roll the money from that payment over and apply it, plus any other cash you can scrape together, toward the medical bills. Once the medical bills are out of the way, repeat the process and roll the payments over again targeting the student loan debt. At this point, you should have a bunch of cash to throw at those student loans each month until all that debt is off your backs once and for all.

I’m really proud of you two, Mikayla. If you’ll follow my plan from here on out, you’ll gain control of your money and be set to start saving and building real wealth!


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 Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.


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