daves says 2016 bKENTUCKY (11/11/17) — This week Dave advises a single person about budgets and discusses extended warranties for used cars.

Dear Dave,

Do you have any tips for how single people can stay on track with their finances?

Deb

Dear Deb,

The first thing I’d suggest is the same advice I give to married couples, and that is to spend less than you make, and live on a written, monthly budget. Sit down at the end of each month and write down — on paper — all your expenses and income for the upcoming month. Give every dollar a job, then spend everything on paper before the month begins.

When you think about it, budgeting isn’t that difficult. All it takes is a little time and a few basic math skills. Some expenses, like your mortgage payment or rent, will be the same. If you have a car payment, it should remain constant as well. Things like utilities and groceries may fluctuate a little based on the time of year, but you can formulate pretty accurate estimates by looking at past months.

Another thing I would recommend is finding a mature, trustworthy friend or family member to act as an accountability partner. This person should also be good with money, and your relationship should be strong enough that they’re not afraid to call you out if you start behaving irresponsibly with your cash.

Sit down, just the two of you, once a month and talk about your finances. You can even go over your income and budget line by line if it helps. The point in this scenario is to get support from someone who cares about you, and is willing to be there – and help hold you accountable – for the financial decisions you’re making.

—Dave

. . .

Dear Dave,

What is your opinion of used car warranties?

Anonymous

Dear Anonymous,

I’m not a fan of extended warranties in general, and I especially dislike used car warranties. In my mind, they’re bad because they’re expensive and — on average — of little benefit to the buyer.

Did you know, in many cases, only about 12 percent of what you pay for used car warranties goes to cover the cost of repairs? That means around 88 percent goes toward profit, overhead and commissions. In fact, some used car dealers make more money from the sale of extended warranties than they do on the sale of actual cars.

The best way to cover yourself is to buy smart and self-insure. Save up an emergency fund of three to six months of expenses, and stay away from stuff like used car warranties.

—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 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

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