Teaching kids it's OK to spend money

Dear Dave,

We've followed your advice and put our kids on commissions instead of allowances. Now, they know they have to earn things instead of having it handed to them. The problem is our 10-year-old daughter. She is extremely frugal and never buys anything. We want her to understand its OK to spend money if you do it wisely. Any advice?

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Susan

Dear Susan,

Well, it's not the worst problem to have – especially at that age. But you're right for wanting to teach her wise spending habits.

Each of us has the personality of being either a spender or a saver. As parents, it's our job to help accentuate our kids' strengths and help them stretch and grow in areas where they have weaknesses.

Praise her for being so good at saving, but encourage her to spend a little, too. Spending is one of the rewards of disciplined saving and working. You might let her pick something she really wants and help her make plans to save enough money to buy the item. Once she has enough money, then it becomes a celebration of a goal reached.

There are three good things you do with money – you can spend it and have a little fun, you can save it and build up security, and you can give it away to help others. Focusing too much or too little on any of these is not healthy.

Dave

Trustee refuses to close case

Dear Dave,

Some close friends of ours filed Chapter 13 bankruptcy a few years ago. They paid everything in February, but the trustee refuses to close the case. Can the trustee do this, and if so, why would it happen when they've paid everything off?

Chris

Dear Chris,

These folks need to go directly to the trustee and ask point blank why their case hasn't been closed. I know several Chapter 13 trustees, and for the most part they're not unreasonable people.

They do have very strict laws they must abide by, though. It could be something simple like paperwork that needs to be signed. The bankruptcy court in their area might even require a voluntary dismissal on their part before the trustee can close the case.

In that event, the next move is theirs – not the trustee's!

Dave

Can you change the mutual funds in your Roth IRA?

Dear Dave,

I just retired from the military, my wife works full-time and we're seeking better mutual funds. Can I transfer my poor-performing Roth IRA mutual to another institution without incurring a penalty? Also, which mutual funds do you recommend for Roth IRAs?

Dan

Dear Dan,

Yes, you can. It's called an IRA rollover. By doing this, you can roll from Roth to Roth or from mutual fund to mutual fund without taxes or penalties.

I never recommend specific mutual funds. I go with good growth stock mutual funds that have been open for five years or longer. If you can find some with solid 10- to 20-year track records of success, that's even better.

Spread one-fourth of your investment over each of these four categories – growth, growth and income, aggressive growth and international. Then sit on them. Mutual funds are not for short-term investing, so what I'm talking about here is crock-pot cooking, not a microwave approach.

The only way to beat the market is by staying in it for the long haul!

Dave

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