Dave Says: Keep your dignity and work your way out

Dear Dave:

My wife and I will both turn 30 next month. We have two young children, and we make a little over $85,000 combined. The problem is we have about $70,000 in debt. Some of it is credit card debt, but nearly $50,000 is in two car loans. Her mom and dad have offered to let us move in with them, so we can save up money and start getting a better handle on our finances, but we’re not sure how we feel about this. What’s your advice?

— Justin

Dear Justin:

You’ve got a ridiculous amount of money wrapped up in those cars. I’d sell the stupid things, get into a couple of little beaters, and start living on a budget and paying down debt.

In your situation, the only scenario where I’d even consider taking the in-laws up on their offer is one where the stay is for a very short, agreed-upon period of time. They’d have to be absolutely wonderful people, too, and everyone involved would need to know their boundaries.

But you guys can get out of debt pretty fast if you’ll just lose the cars. You could even save a little money on the side while you were paying down debt, and buy a better car as soon as the debt was gone. You might love your cars so much that you’re unwilling to make the sacrifice. Not me. I’d rather keep my dignity intact, and work my way out of the mess I created!

— Dave

Dear Dave:

I’ve been struggling financially for the past few months, so I’ve been playing the lottery once a week. To me, the chance to win millions is worth a few dollars a month, even if things are tight.

— Paula

Dear Paula:

You’ve told me you’re having money troubles, and at the same time you’re throwing money out the window every week? Honestly, the small amount you’re talking about doesn’t make a difference. Even if it’s just two or three bucks a week, that action represents a lot of financially irresponsible behavior in your life. I’m going to be very blunt with you. The lottery is a tax on the poor and people who can’t do math. Your chances of winning are bleak at best. Did you know the odds of winning the Powerball jackpot are about 1 in 292,000,000? There are plenty of other very unusual things that are much more likely to happen to you than winning the lottery. Your chances of making a hole-in-one on the golf course are about 1 in 12,500. Even your odds of having quadruplets are around 1 in 11 million.

When times are tough and you’re strapped for cash, the last thing you need to do is spend what little you have on gimmicks. My advice is to focus on working hard, living on a tight budget that cuts out all unnecessary expenses, and saving every penny you can. Unlike the lottery, this is a plan that works every time. When you start living on a budget and get out of debt, it provides a little bit of breathing room in your life. You might even feel like you got a raise! Don’t let your finances—and your dreams—be hijacked by the lottery.

— 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 16 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.