Dave Says

By Dave Ramsey
Author, The Total Money Makeover

CBN.com – Financial guru Dave Ramsey answers questions about wise financial decision-making.

Taking Care of Grown Kids

Dear Dave,

I’m married and have two adult stepkids. I tend to be stricter in money issues than my wife. My oldest stepchild, who is 30, and her child moved back in with us because things weren’t going well in her job. My stepson is 21, in college and still lives at home. My wife gives them money when issues arise. I think she’s finally getting tired of doing this, but how can we fix it?

-- Jeff in Jacksonville, FL

Dear Jeff,

If she’s 30-years old, this is about 13 years late in coming. The thing is, sometimes people confuse putting your foot down with being mean. You’re not being mean when you teach a 30-year old how to self-sustain and require that of her. The same thing goes for a 21-year old.

Now, being a single mom is really tough. More than half of all single moms live below the poverty level. Allowing her to come back home for a little while is a noble thing, but if you do that without a solid game plan and exit strategy in place, you’re asking for trouble!

It’s a little tougher at this stage, though, and it’s going to be like teaching an old dog new tricks. You’ve also got to make sure that you and your wife are completely on the same page. In your situation, I’m sure you’ve experienced the evil stepdad routine. Make sure the kids understand that you’re not pushing them away for good, but that you’re both giving them the opportunity to be all they can be. That won’t happen while they’re huddled under momma’s wing.

Once you two are in solid agreement on every point, sit down with the kids and let them know the ways you’re going to continue to help them and the ways you won’t. You might help with food, but not money. If they’re going to continue to live with you, there might be an understanding that it’s only until a certain date, and during that time you’re going to teach them how to stand on their own two feet through work and how to handle money.

Remember the saying if you give a man a fish you feed him for a day, but if you TEACH a man to fish you feed him for a lifetime? They’re not going to learn when you give them everything or pay their bills for them. But when you make it a teaching experience, they’re going to feel better about themselves and YOU’RE going to feel better because you’ve got responsible, adult children out there in the world.

- Dave

Divorced With No Debt

Dear Dave,

I went through a divorce that was finalized in September, and I have two kids, 12 and 17. I’m debt-free and own my own home, which is worth about $350,000. I also have $160,000 in savings and I receive $1,200 in child support every month. Friends tell me I should start investing, and they’re all telling me something different to do with my money. What do you suggest?
Mary in Cincinnati, OH

Dear Mary,

Unlike most ladies who go through a divorce, you’re in an excellent financial position. Your net worth is a half-million dollars and you have no debt, so in a financial sense life’s not too bad.

The first thing I’d say is that you shouldn’t make any life-changing decisions right now. This divorce is still fresh, and you should never make big, long-range decisions when your emotions are out of whack. As for the $160,000, I wouldn’t do a lot with it right now. I’d put $100,000 of it in a CD for a year until you get over the shock and change of what’s happened. You won’t make much money off of it, but you’re not going to lose anything.

Then I’d take the remaining $60,000 and park it in good growth stock mutual funds – ones that are very conservative and have long track records. A year from now, your mind will be in a better place and you’ll be in shape to make real plans for the future.

Also, you’re going to be an empty-nester in a few years. You’ve got to decide what you want to do with the rest of your life. Do you want to back to school, start a business or maybe even be a lady of leisure? You’ve got a little learning to do about investing, too, and giving yourself this year will allow for education and thinking about what you want out of life. It’s probably a little scary for you to think about investing right now, but knowledge has a way of erasing fear and you’ve got a responsibility to your kids to invest this money wisely.

Here are the rules, Mary. Take your time, don’t invest money in something you don’t understand and don’t invest money in real estate or mutual funds unless you’re going to leave it there for at least five years. Make sure you spend time loving on your kids, too. That’ll help with the healing process as much as anything.

- Dave