The Ramsey Show - App - Will I Have to Pay My Parents' Debts When They Die? (Hour 1)

Episode Date: October 26, 2018

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🎵 🎵 Live from the headquarters of Ramsey Solutions, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. I'm Dave Ramsey, your host. This is your show, America. Thank you for joining us. Open phones at 888-825-5225. That's 888-825-5225. You jump in and we'll talk about your life and your money. Amanda starts off this hour

in Los Angeles. Hi, Amanda. How are you? Hi, Dave. I'm doing really well. And yourself? Better than I deserve. What's up? So my question is, if my parents die with student loan debt, am I and my siblings responsible for that? Who is the student loan debt on, and did you sign for it? My mother. It's my mother's. i actually don't know how much it is okay so she borrowed money to go to school and she signed for it you didn't sign for it you weren't the student okay is that what you said is that what you said

yes okay if that's the case you're not liable for it. Okay. When she dies, if she has debt, the debt will be paid by the sale of the items that she owns before heirs receive anything. So when you die, what you own is sold to pay off your debts, and there's anything left that's distributed to the heirs okay but you are not let's say she dies penniless and she has three hundred thousand dollars in student loan debt the student loan debt people get nothing no one will pay them no one is liable to pay them okay but if she has a three hundred thousand dollar paid for house it would be sold and we would pay off the student loan debt before you guys got anything in that example if there's a three hundred thousand dollar in debt three hundred thousand

dollar house they would you would get nothing they would get paid okay because she's also So, refinanced our parents' home, trying to get into the, to flip houses, and on top of the student loan debt. Yeah. So, you're basically saying she's doing stupid on parade. Yes, and my father is kind of given up trying to teach her and he's just kind of keeping their finances as separate as possible from what i understand yeah on top of which my brother is still living at home and is not getting his act together yeah well that's a lot of bad news for all of those folks, but it won't affect you. Okay. Unless you choose to write checks into this madness, which I would not do.

No. I'm attempting to get my affairs in order as fast as possible because I plan on retiring a millionaire. There you go. That's the right track to be on. But, yeah, you're not going to be able to. You do not inherit debt. When someone dies, what they own stands good for what they owe.

And the difference is left to the heirs. That's all it is. And so, for instance, for some of you listening, if you wanted to keep the family home, but mom had $50,000 in credit card debt, then you would have to pay the $50,000 in credit card debt in order to be able to keep the house, in order to keep from having to sell it to pay the credit card debt. You just pay it out of your pocket to keep the house. But bottom line is what you own stands good for what you owe. Your assets minus your liabilities equals your net worth, and that's all that would go to the heirs in the event of someone passing away. And that's assuming you did not sign on any of that person's notes, which obviously we wouldn't do, especially in the case of Amanda.

Kyle is with us in Greenville, South Carolina. Hi, Kyle. How are you? Doing well, sir. How are you today? Better than I deserve. How can I help? Yes, sir. So we hit Baby step seven sometime around March last year. Yes, sir. And we've been saving aggressively since that point, possibly getting into some real estate or just we're really looking for some non-retirement investing advice. We have about 300,000 to do something with by the end of the year. We've just kind of been hesitant to do something with by the end of the year. We've just

kind of been hesitant to put it anywhere until we got more information. Kind of had a better piece about where to put it, I guess. Gotcha. Okay. So what is your long-term plan with your wealth building money? What are you going to invest it in? Well, we were going to do some mutual funds outside of our current retirement, but we also are learning more currently about real estate right now as we speak. So the more we get our mind wrapped around it and feel a little bit more at peace with that, we're probably going to go invest and have some rentals, maybe 10 to 20 rentals over the course of the next six years. Okay.

All right. So take 100 or 150 of that and buy a rental house in Greenville, South Carolina then, right? Yes, sir. Okay. That's our goal. That's cool. Yeah, it's okay to let it just sit for a little while. If you want to park it in something that rides the market, when I'm saving money at that stage, at Baby Step 7, which I obviously am at,

then what I do is sometimes I'll just throw extra cash I've got like that into a simple S&P 500 fund. It's a no-load fund, and it's going to do whatever the market does. So it could go down before I pull it out. But most of the time it goes up. I mean, you could lose a little bit on it, but at least it's going to ride the market. And, you know, market's doing real – it's hot right now. I don't know how long it'll be hot, but that's what you're facing. And so, you know, you could park that 300, but that's what you're facing. And so,

you know, you could park that $300,000 in there and, you know, you might make $20,000, $30,000 on it while you're waiting to buy your first piece of real estate. But I just, I throw a certain amount every month into an S&P and when it gets big enough, I use it to buy real estate with. And that's how I do it. But I mean, you can do whatever you want to do. If you want to set a certain amount in mutual funds permanently, you probably want to try to beat the S&P with those funds. But the money you're kind of just holding out on, then, you know, you just hold that out. But if you want to leave it in the money market and not take any risk with it, you can do that as well.

It's not a problem at all either way. Nicole is with us in Tucson, Arizona. Hi, Nicole. How are you? I'm doing great, Dave. Thank you so much. It's a pleasure talking to you. You too. What's up? I have a couple of questions to ask you.

We are actually finally taking a financial piece, but we have no debt except our mortgage. We just purchased a home about three months ago. We paid $554,000 at $380,000 down. And we are really excited.

My husband is really wanting, and both of us, wanting to pay off our mortgage as soon as possible. We owe about $174,000 left. But my question is about some drips, the dividend reinvestments. We purchased about 20 years ago when we got married. We paid $5,600 for them, and they're about $22,000 now. I just didn't know what your opinion is about whether we should pull that out and just put that in socket towards the mortgage or whether it would even be worth just continuing to put it.

My husband's a federal employee and retired from the military, so I just kind of don't know where the best is to just either leave it there or... I think you told me your goal is to pay off your mortgage. Oh, yes. I'm still talking to the same lady, right? Yes, sir. Yes, sir, you are. Yeah, so cash it out.

You're going to pay some taxes on it. Throw it at your mortgage. Just start throwing stuff at mortgage. Odds and ends like that. I'm going to sweep the corners out. It's nice to have corners. We've got 22K piled up in them, but it's a nice corner. But yeah, go ahead and sweep the corners out. Anything like that i'm gonna sweep the corners out and it's nice to have corners you've got 22k piled up in them but it's a nice corner but yeah go ahead and sweep the corners out anything like that let's gather it up hold your taxes aside whatever you need to hold aside to

do it and then get your tax guy or gal to calculate that for you and then throw that at the mortgage i just start when i start chunking stuff with the mortgage as long as left until i did it didn't leave but you you're on track. You're doing really good. Congratulations. Let me tell you a story about two families that are very much alike in a lot of ways. Both families have two working parents and a couple of young kids. Each has dead and has struggled to make ends meet, but they're starting to make headway with their budgets and smarter decisions with money. They have dreams and plans, and the only real difference is that one family has the right amount of term life insurance and the other doesn't. Big difference. If one of the parents die, and that does happen. Their well-being would be destroyed. Paying for the mortgage, utilities, food, and other bills would be impossible,

let alone saving for education or retirement. That's why every day I talk relentlessly about getting term life insurance. Just go to ZanderInsurance.com or call 800-356-4282 and see how inexpensive it really is. Be the family that takes those deliberate steps to be different and responsible. It really does make you the hero of your story, and it puts you on course for better things ahead. Thank you for joining us, America. This is the Dave Ramsey Show. We're glad you're here.

Joanne is with us in Los Angeles. Hi, Joanne. Welcome to the Dave Ramsey Show. How can I help? Hi, Dave. Thanks for taking my call. Sure. What's up?

So we are currently on Baby Step 1. We've been on a plan for months, and we're on Baby Step 2. So we're in the process of getting life insurance. It was important to us, sorry to meet my husband, this summer that his dad took out a policy on him, a full-term policy on him when he was younger, and he wants us to eventually take that over and make those payments. I don't know when that is, but we do have four kids. So I'm not exactly sure what the best thing to do,

since I'm not the beneficiary to that is, or how to handle it. Okay. So he took this out when your husband was a child? Yes. Okay. This is not a term policy. It's a whole life life insurance policy. Yes, and it's close to half a million dollars.

Wow. It should be canceled. Okay. If it's a whole life life insurance policy of a half million dollars, it's very expensive. Right. Yeah. And my main concern is, you know, obviously I'm not the beneficiary and I don't, I mean, he's a good guy, so I'm not worried about, you know, that.

I don't care if he's a good guy. It doesn't matter if he's a good guy. It's really weird that it's continued to have the parents are the beneficiary and this is a grown man with family of four, with four kids. Yeah, they started when he was, like, super young. He's a wild one. But it's strange. Yeah.

How long have you been married? How long have you been married? Five years. Yeah, and in five years they've not addressed this issue? That's strange. That's strange. That's strange. Yeah, really. I mean, you should address the issue.

They should not be the beneficiaries anymore. You should be. And really, the policy ought to just be canceled. Because I would not want to pick up the premiums on a half-a-million-dollar policy that's a whole life policy because it's 20 times more expensive than term to create an investment inside of it called cash value that has a poor rate of return that when you die they keep your money so whole life life insurance is a horrible financial product and so if you just call me up and you just owned a half a million dollars of whole life i would say cancel it as soon as you got your term in place.

But you're not paying for it today anyway, so today you get your term insurance in place that's proper on you and on your husband. And I think your husband should have a discussion with his dad and say, Dad, I'm going to go ahead and suggest you drop that policy now. I will not be taking it over. I do not want it. And I don't think you ought to continue with the expense of it. I think not be taking it over. I do not want it, and I don't think you ought to continue with the expense of it. I think you ought to drop it.

Right, yeah. I don't want to be paying for something that's not needed because we have full intentions. Well, it's not only not needed because we're not going to take it over, and that was the original plan, and that plan has now changed. Yep. Because you get to make decisions as

an adult. Isn't that amazing? Steve is with us in Carlsbad, California. Hi, Steve. How are you? Dave, how are you today? Better than I deserve. What's up? I have a question regarding part of my retirement savings comes as a thing called a pension from my company,

and that overall is about 8% of my total assets. It's not an asset of yours if it's a pension. Well, it's projected to be at a projected retirement date of about $284,000, and that would be about 8% of my total assets. Yeah, okay. And the question is whether to take that as a lump sum or – Yes. Okay. Yes.

Here's why, okay? If you die – or not if you die, when you die, because we're all going to die. Okay, when you die, that money's gone because it's a pension. Yes. And if you have a survivor benefit or something, it may go to your spouse for a while. But when you and your spouse die, even if there's a survivor benefit, the money's gone. It's gone. It's gone. And if you live, or as long as you live, it's going to pay at a rate of about 5% in this current market. So it's as if you had an account and the investment advisor said,

Okay, Steve, we got an account for you over here, $285,000. You can invest it. You can make 5% on your money, and when you die, the money's gone. Or you can take that $285,000, you can roll it into some mutual funds in a good IRA rollover, and mutual funds will perform better than 5%, and when you die, the money stays with your family. Well, that would be a better deal, right? Yes.

That's what I was thinking versus a 100% joint and survivor annuity. It's still when both of you die then. You've got survivorship on it, but when both of you die, the same concept applies. The bottom line is it's got a decent but low rate of return while you live, but the fact that you lose all the money when the two of you die makes this a bad deal. And so you always take pension lump sums, or almost always take pension lump sums and roll them to IRAs and invest them in good growth stock mutual funds. So it sounds like your net worth is in excess of a million. Yeah, it's close to two.

That's probably about four oh well total total net worth assets house and so forth okay well done sir congratulations how old are you i'm 63 way to. How much of this did you inherit? Probably somewhere in the 300 to 400 range from both my family and my wife's family. Were you a millionaire before that happened? A millionaire before my wife's mother passed away, yes. When my mom, my parents died relatively young at that point in time, not a millionaire, no. So would you say that you have a $4 million net worth because of inheritance or because of your savings patterns because the amount inherited is is maybe 10 maybe 10 it's almost irrelevant yeah okay cool because i'm always researching and asking millionaires how they did it for the benefit of our listeners because i got a 24 year old listening right now that's got the opportunity

of hearing from an actual 64 year old person who actually has a $4 million net worth. What would you tell that 24-year-old? How should they be you when they grow up? Well, certainly you've got to live well below your means, live a modest lifestyle, which we have done. And I think also, too, I know when I listen to you, people do stupid things. I've done stupid things. I think if you can limit the stupid things that you do along the way.

That's good. I like that because because every every everybody listening right now uh is has done or will do stupid things but if you can minimize those stupid things along the way and live a modest lifestyle live below your means, avoid. So do you think it can still be done? Can that 24-year-old still have a $4 million net worth 40 years from now if he's listening to me right now? Yes, probably even higher if they minimize those stupid things that maybe I didn't minimize as much along the way, yes.

Very well done. Well, congratulations, sir. Man, you've done very, very well. So, yeah, I would roll your pension into an IRA, and that way it survives you. And it's that simple. The math on that works to your benefit. While alive, if you put it in mutual funds, and upon death, for sure, you come out 300 grand ahead. So, no question about it.

Hey, thank you for joining us, and thanks for letting me interview you for a minute there. It's always good for people to hear how to be a real millionaire. Oh, I love this millionaire subject. It is so intriguing. You're going to be hearing more from Ramsey Solutions on it, I promise. I promise. This is the Dave Ramsey Show. Thank you. Thanks for joining us, America. Dana is on the line in Memphis.

Hi, Dana. How are you? Great. Good afternoon, Dave. Thanks for taking my call. Sure. What's up? So, me and my brothers are taking care of mom. Dad passed on years ago.

She's 78 and intermittent poor health, has $60,000 in what we would call her retirement fund, and then about $6,000 in a checking account. And that retirement fund has been a rental house that my brother had used to pay off the rental house, and he's basically been giving her all the rent money, even though he covers all the maintenance, just kind of extra gift from him. But that's become a bit of a problem because he owns a small business, and that's really not his focus, so it often goes without a tenant. So mom doesn't get steady money coming in. So I've been wondering, you know, if you have a recommendation on maybe a better consistent investment, maybe a dividend paying

stock or just a mutual fund or want to get your thoughts on that. And her financial situation is her net monthly is about $250,000 in the hole from when she gets her Social Security after she pays her rent, which includes an independent living with meals. So that $200 to $300 a month, we've been chipping away at her checking account over the past few years, and that's why it's down to only $6,000. That's about time to start hitting the $60. Okay, so the $60 is in cash cash and it's from rental income over the years yeah for about the past eight years okay so you've got that cash and that's invested in what

in my brother's one of my brother's rental property oh so it's not in mom's money it's not in cash he could liquidate it he could he could give her the cash if if we needed if we decided to go that route but he basically just took the money and paid off his rental house and started giving her all the rental income oh i see okay and so her investment that she has made in this rental property is not doing well because it's not being managed well. Correct. Okay. And where is the property?

It's around Jackson, Tennessee. So she lives in Memphis with me, and it's near my brother. It's in his hometown, but it's just still a burden on him. And I think it's kind of, even though he says it's not a problem, I think deep down inside it's a problem. So it would be better off to sell the house and use the money to invest in something that doesn't require effort. Correct. Okay. Yeah, I mean, if you just did that and you put the money in a mutual fund,

if it throws off $6,000 a year, that's $500 a month. That's 10%, right? And that covers our shortfall. What are your thoughts on dividend-paying stocks? Do you think that's more secure and safer? No, I don't think it's more secure or safer because you're not well diversified. You're stuck in one or two stocks in a drip, and I wouldn't get into that. I would pick out a growth and income mutual fund and a balanced mutual fund, put about $30,000 in each,

and try to find something that's got a track record of paying up around 10% a year, 8% to 10% a year in growth, and just drain the growth off of it, and it should run in perpetuation to the tune of about $500 a month then, assuming you net $60,000 out of the sale of the house. But, yeah, sit down with a good mutual fund advisor. Do you work with one? My company uses Fidelity, so they've been pretty good. So, no, you don't work with a financial advisor. Then your company is a – you're talking about your 401K and stuff.

Correct. Yeah. No, just grab one of the SmartVestor Pros off our website, people we endorse, and sit down with them. Have your mom sit down, too, even if she's just so she kind of knows what's going on, and we're going to set the money in something that's going to generate a little income. Doesn't have to generate a lot. She's only a couple hundred bucks short a month. And if that $60 just generates $6,000 a year, that's $500 a month.

I mean, if it does half that, you're still okay. So what we're saying is that this house is really poorly managed. It's not doing hardly anything. Yeah, it just comes and goes. There's been a couple years where it was about $700 a month consistently, but the last year I think it's set in. Okay, now wait a minute. If she's getting $700 a month off this house, why isn't that covering her $300 shortfall?

It was, and it was building her checking account, but there's been other factors. I wanted to keep it simple that drained her checking account. Okay, I got you. Yeah, then let's cash it out and put it in a good mutual fund or a couple good mutual funds and let's walk that through. That's how I would do it. So, good question. Thank you for joining us.

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Steph is in Nebraska. Dave, I just read the Total Money Makeover and realized we're doing things backwards. We have $23,600 in debt, $26,000 in savings. Should I deplete that to become debt- free? Yes. That really makes me nervous. Can you explain the logic? I want you really nervous. You're acting like you're not in debt now and screwed up. When you pay it all off and you got $2,000, now you're going, ah, which is what you ought to be doing right now, looking at this mess. And that makes you rebuild your emergency fund really really quickly that's the logic with what you're paying out in payments

you can rebuild that emergency fund real fast plus you get on your budget and get really really focused because you're having a moment it's good for you moves things along that's exactly what i would do john's with us in Minnesota. Hi, John. Welcome to the Dave Ramsey Show. Thanks, Dave, and good afternoon. Afternoon. How can I help? Well, I got quite a mess, and so my question is,

my wife and I just recently sat down and enrolled in FPU, and we did the every dollar budget and realized that we are not able to pay all of our bills with our income. And so we're trying to figure out who do we not pay. We have some student loans we could put in hardship deferment, and we have a lot of credit cards that we could not pay. How do we prioritize this? How much student loan debt do you have? Well, all I see, about $40,000. Gotcha. How much on your credit cards?

Almost $60,000. Okay. And how much on your cars? My wife's car, we owe $18,000 still on, and mine I owe just under $4,000 on. Okay. And what's your household income? $125. And what's your house payment? $1,309. Okay. House is not the problem.

What am I missing? Is there something else? Yeah, we've made a lot of poor decisions. We're both self-employed. We made some poor decisions with my business. It's a construction business, and it just grew faster than my abilities to keep up with it did. And I lost quite a bit of money with that. And so a lot of stuff ended up on our personal credit cards to help float the business.

But, I mean, is there debt other than you're telling me about here with 40, 60, 18, and 4? Yeah, we have $148,000 total. We owe the IRS 8. We have a personal loan to my wife's in-laws for $20,000. We have several of the business has debts. I own equipment, trailers, stuff like that. How much do you own business debt?

Another be 15 probably right around there. Okay. And tools and trailers and stuff like that. Okay. All right. Uh, plugged into every dollar and it's just, just over 148,000. I gotcha. Okay.

Yeah. You got a mess. No question. I'm with you on this. Yeah, we do. It's scary. I understand what you're facing. All right.

The other piece of it real quick, Dave, if I could tell you, we were not making great financial decisions, but our finances didn't look quite this bad a year ago. But we got contacted for a next-of-kin placement for adoption for three kids. And that just has been fantastic in one regard, but it was just like a catalyst to our stupid spending. We had to renovate our home. We bought an unfinished home from a carpenter. In order to meet the state standards, we had to pour about $20,000 in materials into our house.

All right, hold on. We'll come back after this break. We'll talk this through together. This is The Dave Ramsey Show. We're talking with John in Minnesota. They adopted a child last year and adopted some children last year, I guess I should say. And that started a ball rolling where they went stupid on steroids, spending money left and right in the process, and have gotten themselves in a real, real pinch here.

$148,000 in debt, $125,000 in income. Fixed up a house on credit cards and borrowed money from the in-laws and owe the irs and owe student loans and cars and trailers and everything else is that a fair summary what you told me so far yeah we pretty much owe everybody something yeah okay so there's a couple things there's three sides to the equation that you can move the needle with here. The first side of the equation is anything you can do to get your income up temporarily. The two of you, in order to get out of the hole, you're going to have to work like crazy people. What's your house worth now that you've fixed it all up it's it's not completely done uh we owe one how did you get the adoption completed if you're not

living in a completed house uh you wouldn't believe how desperate the foster care system is dave uh we actually did not own our house when we got these kids. We were in a contract for deed trying to find a bank that would be willing to give us the money for a nontraditional loan because we're first-time homebuyers on an unfinished house. And I did find a bank that was willing to as long as we finished it within five years. But it was appraised at $280 recently. So are they foster kids or adopted kids? They're adopted now. Is the adoption completion?

It is. What could you sell the house for right now as is? We could probably get $260 for it. And you owe what on it? $170. That's pretty tempting and go rent something and clean this mess up my my only concern with that is because trust me i've stayed up many nights thinking about that is our kids that we had we have five kids total we have five kids total. We have two biological and three adopted. Our three adopted kids all have PTSD, reactive attachment,

just some very serious mental stuff that they're working and fighting through. And I'm afraid that a move and a shift up in their life again is just going to... I'm afraid their parents being stressed out and never home because they're working all the time to clean up $148,000 worth of stupid debt is going to cause these kids problems. Yeah, that's kind of where we're at. Yeah. I work a lot.

Yeah, I bet. And you don't have a life because this crap owns you. Something's going to give. You need to decide what's going to give or it's going to give without you deciding it's going to blow up on you dude yeah so you need to make the call i think you need to sell your house and i think the kids will deal with that temporary shift and change easier than they will deal with two years uh to three years of high stress in the household.

And you never be in there. Yeah. I'm no kid expert. I just raised three. And I never dealt with the stuff you're dealing with. And I understand they're very sensitive, and I get all of that. I'm not trying to be unfeeling. I'm just trying to say, I'm going to rip the Band-Aid off guy.

And I think even with the kids with that situation, that might be the case. I think you guys don't want to sell the house because it's part of killing the dream of the rehab of the house too, emotionally. And so I'm going to blame that on you and your wife. I'm gone, man. You're working on a house. You're trying to run a business. You've got kids with issues that you've adopted.

You've got a house full of different things coming at you at one time. You need to get a few things off your plate. I mean, if you lived in a house that you didn't have to work on and you didn't have any debt, we got rid of two of your three huge stressors here, and I think your all's quality of life will go way up. Sounds really appealing to me. By the way it's a stupid house there's houses on every corner yeah you get you another house dude but you guys have painted yourself in the corner you're gonna get paint on your shoes it's just decide which one you? And so that's one thing you can do. The other thing you can do is you can sell her car. You can sell a bunch of your equipment that you've got and start the process of cleaning this out.

But who am I not going to pay is not a formula that takes you good places in five years when you've got some other options. So I love your heart. I love what you're trying to do for those kids that are messed up, and you're loving on them and trying to help them turn their life around. And in the middle of that, you're just good people, man. You're my kind of folk. I like you. I wish I could just wave a wand and make this go away.

But if I'm you, I'm going to concentrate on these kids and the quality of life my family can have over the next five years. And if I don't have this debt and I don't have the stress of working all the time to get rid of the debt, all of a sudden I've got my quality of life back. And if the one thing I did give up was this house mess. Oh, and by the way, I don't have to work on the house. What hours I am home, I can actually spend time with these children instead of swinging a hammer when i'm at home um i just think there's you just put you you need to put your superman cape up brother you're trying to do 73 things at once i don't

think you can do it all and i think that's showing up in your numbers but um i think you're a good man i think you love people and i think you're trying to do the right thing and you're a good man. I think you love people, and I think you're trying to do the right thing, and you're trying to love your family well. But if I'm you, I'm selling that house. It's just a stupid house. You can get you another house. You get out of that. You get your business built up. You bring up a big pile of cash.

You can buy you another house in two or three years and, you know, settle in there. And the dream of home ownership is not off the table. The dream of doing a rehab while i have three kids with ptsd in my house these things just don't mix you know it doesn't mix there's too much going on on this thing i feel stressed out just talking to you about all of it and i don't have to deal with it so i see what you're facing i'm so sorry but that's what i would do and that's what this show's about, is what I would do. So you can do whatever you want to do.

You're grownups. But who you're not going to pay is not the answer. You are going to pay mom and dad because you're going to do that out of guilt, and you are going to pay the IRS or they're going to come take stuff. You can put the student loans on hardship deferral. You can decide not to pay the credit cards. But eventually, you've got to get this mess cleaned up. And it's going to come back to roost on you.

So I'm glad you're in Financial Peace University. And if I can help you further, you call me back any time. Louis is in Palm Springs, California. Hi, Louis. How are you? Good. How are you, Dave? Better than I deserve.

What's up? I'm trying to advise my mom. She just completed FPU, and she is out of debt except for her mortgage. She's got $19,000 cash in the bank, plus another $6,000 she could be getting soon from an investment she's trying to cash out of. So she potentially will have about $25,000 cash. Looking at her budget, I figure about $12,000 would be a good three to six month emergency fund. Okay. She's got about potentially $13,000 extra cash.

She's 53 years old. She'd like to retire at 65. She has $170,000 in a 401k. I just got her set up to do automatic withdrawals into a Roth IRA, but she'll max that thing out at $6,500 a year. So right now she'll be investing 15% of her income into retirement. I projected with that, with the 15%, I did about 10% to be a little conservative. I figure she'll be at about $850,000.

If you're not going to force feed the first year Roth with some of it, which I might go ahead and drop $5,500 on this year's Roth, or $6,500, which she can do at her age, on this year's Roth out of it, and then jump forward and start your withdrawals for the Roth after the first of the year, that's probably what I would do with some of it. And I'm probably throwing the rest of it at the house, maybe step six. Because you're doing four, five, six, five doesn't apply. That's right where you are. But, you you know you're right on the right track you're barking at the right trees here and so i think you're doing the right kind of stuff it's how i

would do it good question man thank you for joining us that puts this hour of the dave ramsey show in the books. Hey, it's Blake, Chief Production Officer for the show, and here's a little tip for 2018. Go download our revamped Dave Ramsey Show app from the App Store. We're always listening to your feedback and adding new features to make it even better. Check it out.