Dear Dave,
Where did the government get all of that bailout money? Did they print it, or did they borrow it from China?
Carl
Dear Carl,
It’s none of the above. When the government runs a deficit, which means it spends more than it makes (that, of course, happens every moment of every day) it borrows money by selling U.S. government bonds, or treasury bonds, on the open market. China owns some of these bonds, but they certainly don’t own them all.
Treasury bonds are sold to lots of investors. Corporations buy them, as do individual investors, because these bonds are theoretically some of the safest on the planet. So don’t worry about the China angle, Carl. They didn’t make us a direct loan of hundreds of billions of dollars to handle the bailout. That’s just another bunch of conspiracy-theory bull.
Dave
It’s just a stupid car!
Dear Dave,
I’m 22 years old, in the military, and our yearly household income is about $20,000. We’re trying to get out of debt, but we owe $13,000 on a car that we financed at 14.5 percent. We both got $500-limit credit cards to help rebuild our credit rating, so we could refinance the car at a lower rate. Can you give us any other advice?
Josiah
Dear Josiah,
I can definitely help you with the interest rate problem. Sell the car!
No, I’m not kidding. I’m not trying to beat you up, but you’ve got no business with a $13,000 car when you’re only making $20,000 a year. Even if you’d paid cash for it, that’s way too much money tied up in something that’s going down in value. You don’t own the car, dude, it owns you!
Right now your entire life revolves around finding a way to keep a car you can’t afford. That’s ridiculous! If I were you, I’d sell the car, go get a little beater to drive, and give my wife a big hug. This thing is putting unbelievable stress on your marriage, dictating your direction in life, and it’s just a stupid car! Forget the idea of building your credit, too! That’s one of the biggest myths around. Credit hasn’t been much of a blessing to you so far, has it?
Here’s the deal. If you can’t pay cash for something, you can’t afford it.
When you pay cash, you don’t have any payments. Then, you have control of your most powerful wealth-building tool – your income! Now that’s a formula for success!
Dave
Maintenance agreement worth it?
Dear Dave,
I’m interested in your opinion regarding buying a five-year maintenance agreement on a new treadmill. It covers repairs and an annual visit to check and lubricate all moving parts. Is a maintenance agreement ever worth the money, especially if you’re not the handyman type?
Anonymous
Dear Anonymous,
You know why they sell those agreements? Because they’re huge moneymakers!
No, I wouldn’t do that. We have exercise equipment in our home, and we don’t have any maintenance agreements. Lots of folks make resolutions to start working out and get into shape, but very few see it through to the end. A high percentage of expensive workout equipment turns into very expensive coat hangers in a short amount of time.
I don’t ever recommend maintenance agreements, or extended warranties. I self-insure by having money saved up and buying quality items!
Dave
The apocalypse of Hurricane Helene
Patrice Lewis