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Dave Ramsey is a personal money management expert, US national radio personality and author of the New York Times bestseller The Total Money Makeover. For more financial advice and a special offer to our readers, please visit or call 1-888-22-PEACE.

Can I retire without insurance?

Dear Dave,

An older friend of ours is going through a bad time right now, because he had a lengthy and expensive hospital stay and no insurance. Is it even possible to retire with no health insurance and be okay?

- Karen

Dear Karen,

It's possible, but it's very tough. You're taking a huge risk if you allow yourself to be in that situation.

Medical bills are the number one cause of bankruptcy in America. The second biggest cause is credit cards. If you don't have an emergency fund or health insurance, then you're a moving target. Murphy WILL hunt you down and eat you out of house and home.

While I don't advocate certain types of life insurance plans, health insurance is something I strongly advise having, Karen, because it's a basic part of any sound financial plan. You need it, because if you don't have it you run the risk of having to crack open and scramble your nest egg if serious health issues arise!

- Dave 

Is pre-paid tuition a good idea?

Dear Dave,

In your opinion what are the advantages and disadvantages of pre-paid tuition plans?


Dear Elliot,

I don't like pre-paid tuition plans, and I don't recommend them. The reason I don't like pre-paid tuitions plans is that any time you pre-pay something, your rate of return is only that of the rate of inflation.

On average, the inflation rate on tuition during the last 25 years has been about seven percent. In other words, you're making seven percent on your investment. This is a bad rate of return when you consider that 96% of all growth stock mutual funds have averaged 12% or more over the last 25 years.

I recommend an Educational Savings Account (ESA). The ESA can be a mutual fund, which I also recommend, that grows tax-free if used for college. Plus, you can put as much as $2,000 per child, per year, into an ESA.

Stay away from pre-paid tuition plans. It's like savings bonds versus mutual funds. You can do much, much better!

Allow kids to make mistakes?

Dear Dave,

I've started trying to teach my six-year-old about money, but it's so hard to watch him hurt when he has messed up and can't have what he wants. Do you think I should step in and fix things or let him learn the hard way?


Dear Paula,

No good parent wants to hurt their child or see them sad. But reality can be a pretty good teacher when it comes to learning how the world works. Sometimes, a good financial hangover when you're young will teach you a life-long lesson.

As a parent, you've got to look for teachable moments. First, give him a chance to earn some money. That means WORK - no allowances. There's a ton of value and self-esteem to be found in accomplishing a given task.

Once you pay him for the work he does, then you have another perfect chance for those teachable moments. Now, you can teach him about giving, saving and spending and show him how to do these things properly.

It's always hard on parents when they see their kids are unhappy. But sometimes you have to love them enough to let them make mistakes while they're still under your protection!



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Celia Sankar

by Dave Ramsey