Dave Ramsey

Dear Dave,

How do you feel about gambling at a casino, as long as you limit your spending and don’t expect to win big money?

Brian

Dear Brian,

I don’t really have a moral problem with it, but I don’t understand the concept. Call me crazy, but I do not get a thrill from losing money I’ve worked hard to earn. That’s not my idea of entertainment.

When someone tells me they gamble for fun or recreation, my first thought is they’re delusional enough to believe that they’ll actually win—that they think they’re the exception to the rule. Otherwise, there would be no thrill. You may see a news story once in a while about someone winning big money in a casino, but that rarely happens. Think, too, about how much money those people had flushed down the toilet previously while gambling. There’s a really good chance they didn’t really “win” anything. In most cases, they probably just recouped a small portion of their previous, substantial losses.

My advice is don’t waste your time and money on that stuff. One way or another, the house always wins. That’s how they’re able to build those giant, billion dollar places called casinos. Did you know that some of those companies are so big and expansive that they’re publicly traded entities? And guess what? The profits they make off people who are foolish enough to gamble their money away inside their fancy halls—and call that entertainment—drives their stock prices!

Think about it, Brian. Why do all the folks sitting at slot machines and card tables look like they can’t afford to lose money? Most of them look like sad, broken, lonely people. Maybe they change when they sit down. Maybe they were winners in life and with money before they walked through the doors, and their slumped body language and the look of stress and hopelessness they carry is just a coincidence or the indoor lighting. But I don’t think so.

—Dave

Dear Dave,

What happens to the money in an ESA if the child gets a scholarship and no longer needs the money?

Jonathan

Dear Jonathan,

In an Educational Savings Account (ESA), and in a 529 Plan, you are allowed to pull out money tax free in the amount of the scholarship. But very rarely do you find someone going to college completely free and clear. Often tuition is covered, and even tuition and a dorm room in some cases, but zero-cost college is almost unheard of. There are always living expenses, books and other miscellaneous items, and you can use the money in an ESA for any education-related expenses.

The chances of your money getting trapped and you as parents winding up in a situation where you’ve actually saved too much and a child has leftover money just doesn’t happen. This is a bunch of drama found only in the nightmares of nerds. Real human beings don’t have this problem, Jonathan, because nobody ever saves enough!

—Dave

Dear Dave,

I own a landscaping company, and recently I hired some superstar employees. One of them is really good, and I’d like to turn him into a salesman. How should I start this process?

Daniel

Dear Daniel,

The first thing I’d do is talk to some other landscaping companies outside your area that are about your size, while big enough to have a salesman or two, and pick their brains as to how they’re structured. You could go visit them personally, or it could be as simple as a phone call. Just let them know you’re thinking about hiring your first salesman, and find out how they pay their guys and if it’s working well for everyone.

What we’re talking about here is called best practices in business. Find something that works for someone else in your same industry, and apply it to your situation. Think of it this way. If you wanted to lose weight, you’d begin by doing what thin people are doing, right? You emulate behavior that generates positive results.

Another thing I’d tell you in this kind of situation is to make sure the person involved understands that any compensation agreement you initiate in the beginning is on a trial basis for a specific length of time. You’re venturing into uncharted territory here, and while you want to make sure your new salesman makes enough money to eat and have a decent life, you don’t want him to make more than the company.

Come up with a temporary compensation plan that’s agreeable to you both at the outset. Then, have an agreement to revisit the plan in 90 days, six months or a year down the road. There may be some time, and a little bit of give and take involved, but in the end you’ve both got to be okay with the upside and downside of the scale and the natural results. You’ll both be really happy if he’s busting it and making himself and the company financially successful. But as a business owner, you kind of want him to starve out (not literally) if he’s not making sales!

—Dave

Dear Dave,

My brothers and I will soon be taking over a 30-year-old company that belongs to our dad. Do you have any advice for us?

Dennis

Dear Dennis,

I could give you lots more advice than would ever fit in a column, or even in an answer on my radio show. So, for now let’s stick with some basics.

The first thing I’d suggest is to separate the ownership role from your operational roles. In other words, you need to decide ahead of time, and have a consensus, on who’s going to do what job. If you and your brothers are all going to be owners of the company when you “take it over,” but one of your brothers would function well in the role of CEO, then he’s in charge and everyone needs to know and respect that position. As a group, the owners should give the CEO direction, but they don’t make all the day-to-day decisions. In addition, someone needs to be in charge of finances, and you also need individuals overseeing sales and production.

The second thing is you need to decide together how to handle things if someone wants out. If one of you misbehaves or incurs a disability, or if someone simply wants out of the business completely, you have to decide on a fair and equitable way to handle possibilities such as these. So, you’ll also need good ownership documents and a top-notch attorney to help put it all together.

—Dave

* Dave Ramsey is America’s trusted voice on business and money. He’s authored four New York Times best-selling books, including EntreLeadership: 20 Years of Practical Business Wisdom from the Trenches. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on the web at www.entreleadership.com.


Dave Ramsey

Dave Ramsey is a personal money management expert, popular national radio personality and the author of three New York Times bestsellers.
 
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