Dear Dave,

My daughter is in her late twenties, and she has a good job making $50,000 a year. The other day, she told me she has $15,000 in credit card debt and has financed an expensive car she's upside down on. Her apartment in Omaha costs $600 a month, and she is asking for help to get out of the hole. We tried to teach her how to handle money, but apparently it didn't work. How do you think I should handle this situation?

Cindy

Dear Cindy,


Here's what I would tell her if she were my kid in that situation. First, I'm not paying for your problem to go away. I'd tell her to sell the car and get a cheap little beater. She'll have to get a small loan to cover the difference, but it will rid her of a car payment. And hey, a little bit of debt is better than a whole lot of debt — especially when the debt is on something that's going down in value. After that, she can get a part-time job and work her tail off until she cleans up the mess she made.

I know all this sounds harsh, but this girl had a good thing going and she screwed it up by being impulsive and immature. Think about it; she's making $50,000 a year, and only $7,200 of that was going toward rent. Her taxes aren't that much, so where's the rest of the money going? I'm guessing a big chunk is being wasted on restaurants, goofing off and other stuff she doesn't really need.

Let her wallow in it and worry about things for while first, though. Then, if she's willing to accept responsibility for her actions, and she starts working hard toward handling her money wisely, you might help her out once in a while. Every time she pays off $1,000, you could add $500 to the next payment. But I'd test her resolve first to see if she wants it badly enough!

-Dave

Dave Ramsey is America's trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover, EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

I’m debt-free except for my home, and I’ll have that paid off in about 12 months. I currently make $60,000 a year and live in an area of Florida that is designated a flood plain,

because a river that empties into Tampa Bay runs behind my home. Currently, I’m paying $1,070 a month for flood insurance. My house is worth $325,000, and water has only come up into

the yard twice in over 20 years. Since I’m doing pretty well financially, do you think I need to keep my flood insurance policy?

Trudy

Dear Trudy,

From what you’ve told me about the history of your property, it sounds like your biggest concern might be if a hurricane caused a backwash in your area. Insurance is already pretty

tough in Florida when it comes to those kinds of things, but you don’t want to run the risk of your house getting mowed down and losing everything.

If I were in your shoes, I think I’d like the protection of flood insurance. What you’re paying for the policy is such a small percentage of your world, compared to the value of your

home and your income. Keep the coverage, Trudy!