Dave Ramsey, Money Answer Man

Questions for radio host and financial guru Dave Ramsey have been pouring in from Early Show viewers.

He responded to a few on the show Tuesday:

Thelma from Ohio writes: I AM 52 YEARS OLD .. HAVE $32,000.00 IN DEBT .. A $41,206.00 MORTGAGE BALANCE .. $300.00 IN A SAVINGS ACCOUNT .. AND ABOUT $5,000.00 IN A RETIREMENT ACCOUNT. I THOUGHT AFTER THE FIRST OF THE YEAR, I WOULD BE IN POSITION TO START CONTRIBUTING TO A RETIREMENT FUND, BUT I JUST CAN'T SEEM TO FIND THE EXTRA MONEY.

Thelma may be in some financial trouble, but it's never too late to begin, and you're never too old to quit. Sure, she's only got $300 in savings and A LOT of debt. But the way you start saving is to get rid of the debt. Once you don't have to make payments, you can start to save. And you have to make saving an emotional priority. If you had a child or a loved one who was seriously ill and you needed to somehow save $10,000 for their medical bills, believe me, you'd find a way. Make savings a big time, emotional, character-based priority. It's a decision. And a decision you have to make in order to get back on track. Also, beware of the debt snowball. You want to pay off the smallest debt first to create the greatest momentum in your debt snowball. When you start knocking off the easier debts, you'lll start to see results and you'll start to win in debt reduction. So attack those small debts, build up some momentum, and go after the largest ones.

Focus on one step at a time. Get yourself $1,000 cash in the bank. That's the first step. Then work off the debt. That will lead to higher savings. Bottom line: Make a decision and stick to it and tackle it completely. Don't try to do six things at once.

Dave has a question about his son's college loans. He writes: MY SON GRADUATED FROM COLLEGE A YEAR AGO. HIS PRIVATE LOANS TOTAL OVER $100,000, AND HE CAN'T GET THEM CONSOLIDATED. MY WIFE AND I HAVE CO-SIGNED FOR HIM ON SOME. WE CAN'T FIND ANYONE WHO WILL CONSOLIDATE THE LOANS IN HIS NAME ONLY. WE WILL STILL HELP HIM, BUT WE WANT THEM IN HIS NAME. ANY ADVICE?

The real problem here is that this kid has $100,000 in private loans. Private loans are hard to consolidate; sometimes you can pull it off, but it's often very difficult. And besides, that doesn't change the fact that this guy is now $100,000 in debt and his parents are co-signers. My first piece of advice is not to get into this kind of situation to begin with!! So, caution to parents thinking about co-signing on their child's loans: Don't do it!

Also, parents should never co-sign for someone going $100,000 in debt. What would you do if you had $100,000 in credit card debt? Would you want that hanging over your head?

Unfortunately, everyone involved is going to have to take extra jobs and live on a diet of beans and rice to bring in some extra cash and get those loan debts under control. Consolidation is not the answer. It won't make the debt go away.

Robin is seeking some help with her budget: I AM LOOKING FOR A FORM OR A WAY TO KEEP TRACK OF WHAT IS DUE EVERY MONTH. I NEED TO VISUALLY SEE IT. DO YOU HAVE A FORM THAT I COULD USE? PLEASE HELP!

The most important thing to remember when trying to figure out a monthly budget is that every dollar has a name on paper on purpose. Spend all your money before the month begins. Forms certainly can be helpful. And you can get them a variety of ways. There are a bunch of software programs designed to help you with your budget (Quicken, Excel, etc). And my Web site has some forms that are very helpful and available to you free of charge.

Ruby is asking about reverse mortgages. She writes: I AM A SENIOR CITIZEN AND HAVE MY HOME HALF PAID FOR, BUT MONEY IS VERY TIGHT. I HAVE BEEN LOOKING INTO A REVERSE MORTGAGE AND MY CHILDREN THINK I SHOULD DO IT, BUT I AM NOT SO SURE. WHAT IS YOUR OPINION OF THESE?

This a sad situation here for Ruby. Her funds are limited and she can't pay for the house she wants to leave for her children. But I strongly advise against a reverse mortgage, because you won't be leaving your kids a house, you'll essentially be leaving them a mortgage.

Reverse mortgages have the highest interest rates. They are also often fraudulent, and brokers will prey on older folks to get to their money. All in all, a bad idea.

My advice to Ruby, and she might not want to hear this, but it sounds like the best option here, would be to sell the house so Mom has some money to get her through her golden years. A reverse mortgage creates an illusion that you can have your cake and eat it too, but that's really not the case.