Dave Says: Help friend with what he needs, not what he wants

Northeast Mississippi Daily Journal (Tupelo)

Jul. 7--Q. I'm on Baby Step 2 of your plan, and I'll be debt-free except for my home by the end of the year. I have a friend who is very irresponsible with his money, and he often asks to "borrow" cash between paychecks. I don't want to be cruel, but things are getting out of hand with his requests for money.

A. I think you should tell your friend the truth. Let him know you've decided to get control of your money, you're trying to get out of debt and you simply don't have cash to spare. Be sure to do it with a kind spirit, but sometimes you've got to look at the big picture in these situations. You're not really helping someone if you participate in their misbehavior and enable bad habits. Sometimes, you have to love someone enough to tell them no.

Let your friend know how hard you're working to get your finances in order and how it's making a big difference in your life. Maybe you could offer to show him the steps you've taken so far, and let him know he could be successful doing this, too. You might even try to show him how to make a monthly budget and act as his guide and accountability partner if he's willing to accept this kind of help.

In some cases, helping someone means offering what you know they need instead of what they want. But you're never really helping someone who's incompetent with money by simply handing them cash.

Q. My wife and I are both 46, and we have two teenagers in middle school. We were told recently that now is the perfect time for us to buy long-term care insurance. How do you feel about this in our situation?

A. No, now is not the perfect time for you guys to buy long-term care insurance. Research shows there's about a 1% chance of folks your age needing long-term care insurance, and I generally don't recommend insuring against things that have such a miniscule chance of happening. Keep in mind that many factors, such as your current health and family history, could play into your decision of exactly when to buy long-term care insurance.

However, I do strongly urge people to find a good long-term care policy no later than age 60. At that point, the chances of something unfortunate happening begin to rise each and every year. You could think of it as a gift to yourself and your family. Nursing home costs are astronomical these days, and care of that sort can deplete your nest egg very quickly!