Friday, January 30, 2015
Davis Motor Sales banner ad
Posted on 2/2/14

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.

© 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 by using one of the social media links below.

2/6/2014 - posted
3/13 - 16
2/6/2014 - posted
3/13 - 16

Most Read This Week

January 28, 2015 17005

UPDATED: Several Involved in Two-Vehicle Accident

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 26, 2015 7229

KSP Arrests Two on Child Porn Charges; MPD…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
January 25, 2015 7042

Dean’s List Announced

in Top News For All Sites Touching Hopkins by Joyce Riggs
January 28, 2015 6417

Nortonville Man Accused of Meth Possession,…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
January 26, 2015 4961

School Board Votes 3-2 for Utility Tax

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
January 29, 2015 4777

Man Charged with Sexual Abuse of Child

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 25, 2015 4566

Juvenile Hit by Vehicle at McDonald's

in Local (Muhlenberg) Top News by GPD Officer Wes Miller
January 28, 2015 4412

Tax Recall Committee Formed Day After School…

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News

Most Read This Month

January 08, 2015 22098

Woman Claiming to be 'Lady Gaga' Tours Town in…

in Top News For All Sites by Madisonville Police Department
January 15, 2015 21753

UPDATE: Fatality Victim's Name Officially Released

in Top News For All Sites by Doreen Dennis, SurfKY News

Stories Trending Today

January 29, 2015 4777

Man Charged with Sexual Abuse of Child

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 29, 2015 2925

UPDATE - Students Have until Jan. 31 to Enter…

in General News For All Sites by James R. Comer
January 29, 2015 1556

Group Organizing Prayer Circle for Youth

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
January 29, 2015 1418

Kentucky Highway Crews Prepare for Possible…

in Top News For All Sites by Keith Todd
January 29, 2015 1275

Hopkins County Sheriff's Reports Released

in Hopkins News by Hopkins County Sheriff's Office
January 29, 2015 1253

Hopkins County Health Department Food Scores Thru…

in Hopkins News by Barry Franklin
January 29, 2015 1187

Madisonville Police Arrest Reports - Jan. 29, 2015

in Hopkins News by Madisonville Police Department
January 29, 2015 1127

Probation and Parole Violators - January 29, 2015

in Video by Crime Stoppers
January 29, 2015 934

Keystone Approval Will Boost the Economy, Support…

in General News For All Sites by Robert Steurer
January 29, 2015 881

Protect Your Sensitive Information from Hackers

in General News For All Sites by SurfKY News
January 29, 2015 855

Revive the Art of Letter-Writing

in General News For All Sites by SurfKY News
January 29, 2015 837

Whitfield Meets with Fort Campbell Soldiers

in General News For All Sites by Marty Irby