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.

In Other News...

Kentucky 70 West of Madisonville to Close for Crossing Upgrade

HOPKINS COUNTY, Ky. (7/6/15) — As a reminder, P&L Railroad plans to close Kentucky 70/Beulah Road west of Madisonville… Read More

First Oil, Gas Development Public Comment Meeting Scheduled for Madisonville

FRANKFORT, Ky. (7/6/15) — The first of three public meetings to allow interested parties to submit comments concerning… Read More

Most Read This Week

July 02, 2015 15254

Emergency Response Team on Scene of Standoff on…

by Doreen Dennis, SurfKY News
July 02, 2015 7796

Police: Stand Off Suspect in Critical Condition

by Doreen Dennis, SurfKY News
June 29, 2015 4556

Accused Synthetic Marijuana Traffickers Appear in…

by Doreen Dennis, SurfKY News
July 03, 2015 3760

KMA Reminds Motorists of New Kentucky Red Light…

by David Holt
June 30, 2015 3617

Earlington Man Faces Multiple Charges after…

by SurfKY News

Most Read This Month

June 24, 2015 45758

Western Kentucky, Southern Indiana's Largest…

by Doreen Dennis, SurfKY News
July 02, 2015 15254

Emergency Response Team on Scene of Standoff on…

by Doreen Dennis, SurfKY News

Stories Trending Now

July 05, 2015 1429

Hopkins County Traffic Advisory

by Keith Todd
July 05, 2015 1426

More Dental Patients Using ER in Kentucky

by Al Cross
July 05, 2015 1187

4th Fest Ends with ‘a Bang’ of Music, Fireworks

by Tammy Holloway, SurfKY News
July 06, 2015 1033

Man Accused of Choking Girlfriend, Threatening to…

by SurfKY News
July 04, 2015 1022

Recycling Equals Fun During iRecycling Regatta

by Tammy Holloway, SurfKY News
July 05, 2015 735

Study: One Dose of HPV Vaccine Effective

by Melissa Patrick
July 05, 2015 725

Legislator's Log - Week of July 5, 2015

by Brent Yonts
July 05, 2015 689

July 4 Saturday on the Square Features Patriotic…

by Mike Groves, SurfKY News
July 05, 2015 637

Hopkins Ham Radio Operators Link to World

by Doreen Dennis, SurfKY News