Dave Says: Better to pay off an old debt than file bankruptcy

Dear Dave,

My wife co-signed on a loan for an old boyfriend five or six years ago. Now, a collection agency is after her for the remaining $5,000. We make about $90,000 a year combined, and our attorney recommended we file Chapter 7 bankruptcy. The idea of filing bankruptcy scares me. Is there a better way to handle this?

Jeffery

Dear Jeffery,

Your attorney doesn’t sound very bright. A bankruptcy stays on your record for years. It’s just plain stupid to consider trashing your financial life over $5,000.

This collector bought the loan for pennies on the dollar. It’s an old debt, and that means there are very low expectations for collection. At the same time, your wife did co-sign for the loan.

If you have the money, and you can pay it off without hurting yourselves financially, do it. That’s the right thing, both morally and legally. If you don’t have that kind of cash on hand, try haggling with them. See if you can get them to agree to settle for $2,500. Remember to get this agreement in writing before you send them a dime, and do not give them access to your bank account.

Chances are they’ll threaten to sue and all that stuff, but my guess is you can work out something on an old loan like this. It may take a couple of weeks and a little patience, but that’s a small price to pay if it saves you $2,500.

Sorry, but you guys will have to pay something to make this go away. And I hope it teaches you both a valuable lesson — never co-sign on a loan!

—Dave

Apps and stocks?

Dear Dave,

What do you think about online investing apps, and the way they allow you to jump in and out of stocks for really low fees?

Anonymous

Dear Anonymous,

I don’t think about them, and I don’t use them. And I don’t play single stocks — period.

There’s a ton of research out there showing that people who play individual stocks on their own — or with their broker, or with a golfing buddy — see a rate of return of about seven percent on average. You can make anywhere from 10 to 14 percent, on average, with good growth stock mutual funds.

I could probably play single stocks more intelligently than most people, but why? If the average is noticeably less than I’m seeing with my mutual funds, why bother going there? Plus, with a mutual fund portfolio, you’ve got someone who does this kind of thing for a living managing and researching your investments for you in your best interest.

I don’t have an app on my phone that lets me trade stocks, nor do I plan on getting one. There’s nothing wrong with apps, in general, but I’ll never recommend jumping in and out of single stocks as a method of investing.     

—Dave

Gift cards for grandkids?

Dear Dave,

What’s an appropriate amount for gift cards to send each of our five grandchildren for Christmas?

Liz

Dear Liz,

How much do you spend on your grandchildren? Enough to make their parents nervous!

Seriously, I think it depends on two things. First, are you two debt-free, or at least able to provide gifts without going into debt or hurting yourselves financially? There’s nothing wrong with spoiling the grandbabies once in a while. But don’t use Christmas as an excuse to lose your minds, blow your budget, or go into debt every December. The amount you spend on gifts? I would suggest making it reasonable, not over the top, and relative to your income and that of the household in which the kiddos live.

The second thing I wonder about is the ages of all the grandchildren. I can’t imagine a four-year-old getting excited over a gift card. So, if that’s the general age range we’re talking about, have some fun with it! Head down to the store, and really put some thought into these decisions. On the other hand, it might be just the thing for a teenager — especially if you know where they like to shop and hang out. Older kids want to make their own decisions, so depending on the personality of the grandchild, a gift card might be the way to go.

But if your grandkids are still little, please don’t give them gift cards. No, grandma. No!

—Dave    

Interview follow-up

Dear Dave,

What is the proper etiquette after the job interview process? I recently had an interview for a sales management position. I’ve sent a couple of follow-up emails in the last few weeks, and I know I’m still under consideration, but I’m not sure what to do now.

Krista

Dear Krista

Next time, since you obviously have a sales background, how about treating it like a sales call? If you’re on a sales call, and the customer needs to perform some due diligence before deciding, a smart salesperson will ask to schedule a follow-up. Ask if checking back on a certain day in the next week or two will work. You don’t want to be obnoxious, but you want an appointment of sorts — a time frame — so you’ll know when to follow up without being pushy.

In this situation, I would recommend sending another email. You want to walk right up to that fine line that separates bold from obnoxious, because that’s one of things a good sales manager should be able to do. Respectfully tell them you understand the decision-making process takes time, but you need to know when you can expect an answer.

Use the idea that you’re a great sales person, and you’re treating this as a professional sales call. And don’t be afraid to have a little fun with it. If you’re still under consideration, that means they like you. You could even hint at the fact they don’t want to hire a sales manager who doesn’t know how to follow up!

—Dave   

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 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

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