Dear Dave,

We recently began your plan, and we’ve got our starter emergency fund of $1,000 in place. Is it okay to spend this on Christmas gifts if we know for sure we can replace it in January?

- Mike

Dear Mike,

Absolutely not! That’s the equivalent of financial suicide. The moment you do that, Murphy will move in your spare room and bring along his brothers, Broke, Desperate and Stupid.

Everyone wants to have a nice Christmas. And if $1,000 was all the money you had in the world, I’d be okay with you spending a little bit. But the key word in “emergency fund” is EMERGENCY. Christmas didn’t sneak up on you, man. It happens on December 25 every year.

Next year, put a line in your budget for Christmas gifts. You can save a little bit each month, and by the time December rolls around you’ll have a nice chunk of change for gifts and other Christmas expenses.

For now, go out and find a part-time job. If you deliver pizzas or throw boxes over at UPS for a few weeks, you can still make enough to cover Christmas gifts for your family!

- Dave

Dear Dave,

I run a small, family catering business. We make everything from scratch, and we specialize in corporate events. Our problem is that the cost of eggs, butter and flour has more than doubled in the last few months, and some of our best customers are having trouble with the increased price we’re asking for our services. How can I make them understand that we’re not just padding our own pockets?

- Grace

Dear Grace,

It takes money to keep the sweet rolls sweet, doesn’t it?

If I were you, I’d show them your invoices and let them see for themselves what you paid for eggs and other ingredients a few months ago, and what it costs now. The key is to give them a “why” along with a “what.” Both you and your competitors are being affected by the increase in prices, Grace. Some of the bigger companies may be able to eat the increase for a little while longer, but they’re using the same stuff you are, and eventually it’s going to come home to roost for everybody.

In situations like these a price increase is almost always handed down to the consumer. Seems to me you’ve got two choices. You can either raise your prices a little bit and explain why, or go broke!

- Dave

Dear Dave,

I run a small upholstery business out of a shop in my garage. I’d like to expand to a bigger facility. Would it be a good idea to sell my property and buy a place where I could have a bigger shop built?

- Carol

Dear Carol,

I think I’d rent for a while before I jumped into the real estate market. You don’t need a fancy office for the kind of work you’re talking about. You just need more room.

Chances are you can find something simple that’s nothing more than work and storage space for a few hundred a month. I’d stick with that until the business really gets rocking and your revenue can justify a bigger place. Here’s the deal, Carol. It’s going to turn into a nightmare if you get too big too fast, and one fine day realize you can’t produce enough to make the business work! That won’t be good for anybody!

- Dave