Dear Dave: I’m driving a 10-year-old car with 195,000 miles on it. The car needs $1,500 in repairs, and it’s worth $5,000. I have $40,000 in cash saved, $40,000 in investments and I make $80,000 a year. I also have $15,000 in student loan debt, but the only other thing I owe on is my house. Should I pay to repair the car or buy something else for $15,000? — Dave
Dear Dave: Nice name! If you wrote a $15,000 check for a newer car and wrote a $15,000 check for the student loans, it would leave you with $10,000. I wouldn’t buy a $15,000 car in your situation. I’d buy a $10,000 car. You could sell your current car for around $3,500 if it needs repairs, combine that with your money and get a $13,500 car. Then, you could write a check and pay off the student loan.
With no car payment, no student loan payment and a good car, you can really lean into your budget. Think about it. You’d have no debt except for your home, and you could rebuild your savings in a hurry and be in really great shape in about six months. Plus, you’d have $15,000 sitting there in the meantime!
Dear Dave: I have several rental properties, and lately I’ve been spending a ton of money remodeling them because I allow pets. Do you think I should begin refusing tenants with pets? — Jim
Dear Jim: This is a tough one for me, because I have three dogs of my own. I’ve got a pug that’s older than dirt, a shih tzu with an attitude and the best golden retriever on the planet. I love animals, and like you, I’ve got a lot of rental properties. But I don’t allow animals in my properties.
Some people have accused me of hating all animals except my own. I can tell you that’s not true. But the fact is a lot of people don’t take good care of their animals and keep an eye on them. It’s hard enough to find trustworthy, responsible renters these days, and if you add a dog or cat on top of that you’re just asking for trouble. I’ve had situations in the past where I had to spend $10,000 to clean up a house after a tenant had a dog or cat in there. They’ll chew things up, stain and stink things up, and tear things up. Sometimes you even have to replace the floorboards.
I had a lady offer me $10,000 deposit the other day on one of my properties, just so she could move in with her dog. I said no. It’s in all my leases now — no animals. I don’t allow them in at the beginning, and if one of my tenants gets one after they move in they either have to find a new home for the animal or move out themselves. At that point they’re in violation of the lease.
The problem is I really do have a heart for animals. I love them. But as a landlord who’s running a business, it just doesn’t make sense.
Dave Ramsey, www.daveramsey.com, can be heard from 6 to 9 p.m. weeknights on KTTH radio (770 AM).
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