Dave Ramsey says: Set spending limits when it comes to new technology

Dear Dave,

I’m debt-free except for my home, and I have a small business with revenues of around $100,000 annually.

About half of that is profit, and I typically pay myself 40 percent of the biweekly revenue. I’m in the media business, and I need to upgrade some equipment.

At what point do I put back a little more money, or pay myself a little less, to make this happen?

— Luke

Dear Luke,

I know what you mean, man. We’re in the media business, too, and around my office it seems like we buy more and newer technology every day. Really, it’s like a black hole. You could throw money into it the rest of your life, because practically the very moment you open the box it’s obsolete.

We finally decided to designate a percentage of our revenues to equipment replacement. Something is always being replaced, but this way we’ve got a limit and we’ve got something set aside to make our technology needs happen. It’s like the envelope system. If the envelope’s empty, we have to stop buying and put off whatever it is until the cash is available again.

I hope this helps!

—Dave

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