Few expenses, no debt…savings ideas

Dear Dave,

I am 20 years old. I live at home and I go to school full-time. I really don’t have any expenses outside of gas and spending money since I have no rent and my car is paid for. I am starting a new job soon and I was wondering if you could give me some ideas on what to do with the money I save. Any suggestions will help.


Murfreesboro, TN

Dear Charlie,

It is pretty simple. The first thing you always save for if you don’t have any debt is a fully funded emergency fund. That would be three to six months’ worth of expenses. Once you reach that amount, you are going to want to start putting 15 percent of your income into retirement. I would first recommend that if your job has a 401(k) with a match, that you do that up to the match. If they don’t have a match or they don’t have a 401(k) then you should start with a Roth IRA, which is an Individual Retirement Account that grows completely tax-free.

Above that I would challenge you to get serious about it. You are in a position to literally change your family tree. Without any payments, you have the power to save so much money that your children’s children will have an inheritance. I don’t want you to take this responsibility lightly, Charlie.

You could save up and pay cash for your first house if you were really serious about this. That is something that is rare in our society. Don’t be afraid to live like no one else for now: save like a crazy person, live below your means and don’t borrow a dime…ever; and then later, you will be able to live like no one else.


Company moved her then went bankrupt

Dear Dave,

I am writing on behalf of my sister. There is a collection agency that is apparently trying to sue her, and we are just trying to figure out the best route to go. In June of 2000 she got a job with a company that moved her to Atlanta, GA. They agreed to pay for all of her expenses related to the move. She left that company in November of 2000 and moved to another company. The first company actually went out of business not long after that. About six months later, she got a call from the moving company telling her that she owes them money for the move, because the original company did not pay them for the move. She did not sign for the move at any time and she did not contract with the moving company at all. What should she do?


Portland, ME

Dear Lisa,

It sounds like the contract that the movers had was with the company that went broke, not with your sister. She does not owe this money. However, your sister needs to get an attorney because it is very difficult for an individual to fight with a big company. I had a friend once who was sued by a collection agency because he refused to pay a hospital bill from a hospital that neither he nor his family had ever been to. They had the wrong guy. He made the mistake of thinking that the case was cut and dry, and that anyone could tell that he did not owe the money. When the collection agency sued him he went to the courthouse thinking there was no way he could lose. Somehow, he lost the case and ended up paying the $500. So tell her that she needs to get an attorney.

There is a process in every lawsuit called discovery. It is where one side can discover all of the evidence that is involved in the case from the other attorney. Your sister’s attorney would be able to see any contracts that the moving company had to move her furniture under this discovery motion. Just because they moved her furniture doesn’t mean that she is liable. It’s the company that hired them that is liable. And that company, of course, is out of business.

It’s going to cost some legal fees, but it is the only logical way for her to defend herself.



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