dave ramsey blackwhite 300KENTUCKY (7/14/13) – This week Dave discusses "Roommate agreement with family?" and " Is converting to a Roth smart?"
Dear Dave,
My husband and I have been following your plan, and we’re debt-free. Recently he invited his sister, her husband and their two kids to live with us. His brother-in-law recently lost his job, and he did this without talking to me first. I agreed after the fact, but do you think we need a roommate agreement or some kind of understanding while they stay with us? They have about $70,000 in debt, and they haven’t been very responsible with their money. - Amanda

Dear Amanda,
I’ve got to tell you there’s zero chance that my wife or I would invite someone to live in our home without the other’s knowledge and agreement. Pulling a stunt like that is just plain wrong, and you two need to get on the same page long before you try to move these people into your house.

Now, once you’ve straightened things out between the two of you, and if you’re both in agreement, you need to understand that your purpose is to help these folks get back on their feet. Your home is not their home, and this is not an offer for them to stay as long as they like.

You’re going to have to ensure that they’re taking the steps necessary to straighten out their lives. This means working, and it means they start managing their money by living on a budget. Don’t charge them rent, because the “rent” will be that they work and go over their finances with you. Plus, you put a limit on the time they’re going to spend with you. Regardless of what happens, they’re out and back on their own by a certain, specific date.
I wouldn’t suggest allowing $70,000 worth of time for them to get back on their feet. I’m thinking maybe four to six months, but don’t let this thing drag on with no definitive end in sight. That will only cause trouble and hard feelings down the road. You guys might be able to pull this off—and keep the relationships intact—if you set fair and loving expectations on the front end. - Dave
Dear Dave,
I’m following your plan, and I’ve just completed Baby Step 3. I’ve got my emergency fund of three to six months of expenses in place, and I’ve paid off all my debts, except for the house, so I’m ready to tackle investing. I currently have $100,000 in a traditional IRA. Should I convert this to a Roth IRA? - Levi

Dear Levi,
You’ll have to pay taxes on the amount you withdraw, and that will amount to roughly a fourth of what you roll from a traditional IRA to a Roth IRA. If you move $100,000, it will cost you about $25,000 in taxes.

If you have that kind of money saved above your emergency fund, and separate from retirement savings, then yes, I’d convert to a Roth IRA. Don’t cash out your retirement or dip into your emergency fund. And please, please don’t run out and borrow money to make it happen!

The traditional IRA is growing on a tax-deferred basis, while the Roth IRA would grow tax-free. So, if you can pay the taxes out of pocket, I say go for it! - Dave
* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at www.daveramsey.com.

Disclaimer: The content supplied by columnists and letters to the Editor on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such content, statement, or opinions therein. SurfKY News does not necessarily adhere to or endorse content provided by outside non-staff sources.

e-max.it: your social media marketing partner

LIKE SurfKY on Facebook - Click here to LIKE us now.

© Copyright 2015 SurfKY News Group, Inc. All rights reserved. This material may not be published, broadcast, or rewritten without permission. SurfKY News encourages you to share this story on social media.

Weather Sponsored by

1 DOW 17,050.75
+138.46 (0.82%)    
2 S&P 2,013.43
+17.60 (0.88%)    
3 NASDAQ 4,810.79
+19.64 (0.41%)    

In Other News...

MCC Holding Cell Phone Drive For Domestic Violence Victims

MADISONVILLE, Ky. (10/7/15) – Don’t know what to do with your used mobile phones and accessories? Here’s a great way to… Read More

Homemakers Bean Supper Oct. 19

MUHLENBERG COUNTY, Ky. (10/8/15) — The Muhlenberg County Extension Homemakers Annual Bean Supper will be from 5 to 7… Read More

Most Read This Week

October 06, 2015 4729

County Passes Occupational Tax Ordinance

by Doreen Dennis, SurfKY News
October 07, 2015 4509

Alleged Attempt to Hide Meth in Doughnuts Results…

by SurfKY News
October 05, 2015 3981

Four Charged with Drug Offenses after Motel…

by SurfKY News
October 06, 2015 3647

Dawson Man Charged with Cultivating Marijuana,…

by SurfKY News
October 02, 2015 3192

Mahr Park Project Manager Describes Present,…

by Tammy Holloway, SurfKY News

Most Read This Month

September 16, 2015 13237

Mining Accident Fatality - Update

by Doreen Dennis, SurfKY News
September 30, 2015 11302

Dawson Woman Dead After Princeton Factory…

by SurfKY News

Stories Trending Now

October 07, 2015 4509

Alleged Attempt to Hide Meth in Doughnuts Results…

by SurfKY News
October 07, 2015 3043

Vehicle Overturns during Two-Car Collision

by Rita Dukes Smith, SurfKY News Director
October 07, 2015 2741

3 From Greenville Indicted On Drug Charges

by SurfKY News
October 07, 2015 1329

McConnell Bill To Help Families Adopting Children…

by SurfKY News
October 07, 2015 1112

Madisonville Police Arrest Reports Released -…

by SurfKY News
October 08, 2015 994

Madisonville Police Department Reports Released -…

by SurfKY News
October 08, 2015 823

Hopkins County Health Department Food Scores Thru…

by SurfKY News
October 07, 2015 771

MCC Participating in Used Mobile Phone Drive to…

by SurfKY News
October 07, 2015 750

Lt. Gov. Urges Continued Healthcare Path for…

by SurfKY News
October 07, 2015 599

Two Arrested On Drug Charges After Investigation

by SurfKY News