Dear Dave,
My wife and I are debt-free, plus she has a business giving music lessons. We formed an LLC last year when she had several students and was making over $3,000 a month, but that all changed when our first baby arrived. Now, she has only a few students, and they bring in around $700 per month. Should we dissolve the LLC?
Ben
Dear Ben,
First, congratulations on being debt-free and new parents. Happy New Year to you all.
In most states, the only upfront cost for an LLC is the money you pay for the initial set up. There may be a small fee for a business license and subsequent annual renewal, but that generally doesn’t add up to much. Then, there’s the money you pay for filing your tax return on the LLC once a year.
Even if you live in a state where there are other fees to consider, as long as the cost of maintaining the LLC wasn’t killing you, I’d recommend keeping it in place. You went to the trouble of opening it, and you just might use it again someday. Even if your wife is staying home with the baby, she just might be able to take on more students again as time goes by.
Just be reasonable and use common sense. If you spend $3,000 to stay open, and you’re making $700, you’d dissolve it, right? But as long as you don’t have fees that are making you cringe, I’d probably leave it in place.
Dave
Helping dad
Dear Dave,
My dad has been really bad with money his entire life. Anytime he would get into trouble, my grandparents would always bail him out. This time he came to my wife and I, asking for $350 to get out of overdraft at the bank. We’re trying to live on a budget and get control of our finances, and $350 would make things kind of tight at the moment. What do you think we should do?
Jeremy
Dear Jeremy,
I understand feeling an obligation to help your dad. But there’s a lesson here that dad needs to learn, and it’s something that goes much deeper than the money or helping out a family member.
You have to do the right thing, no matter how dad reacts to this. Right now, the right thing is taking care of your family and not putting them in jeopardy. So my answer to dad would be no.
Another thing that needs to happen is for the definition of “help” to change. When you say he’s been irresponsible with money his whole life, giving him $350 won’t help — and it will make you an enabler. Just handing him $350 will actually hurt him, and it will give him the idea he can continue being dumb with money and hit you up for cash anytime.
Like I said, I understand the pull of helping out a parent. So if you feel this is something you absolutely must do, I would advise making the $350 contingent on the fact that he begin and complete a financial counseling course.
Be gentle when you talk to him, and let him know it hurts to see him struggling. But let him know, too, it’s his responsibility to work through his debts and take care of his own finances.
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 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.