Dear Dave,
I graduated from college two years ago, and I have a good job making $60,000. I have about $10,000 in student loan debt, but my mom and dad have a real issue with their roof. It’s leaking in places to the point they have to set buckets around to catch the water, and I’ve gotten repair estimates of $3,000 to $5,000. They’re good, hard-working, blue collar folks, but they’re less fortunate financially and have more debt than I do. What should I do first — help them fix the roof or pay off my student loan debt?
Jordan
Dear Jordan,
You’ve got a great spirit, man. If I woke up in your shoes, I’d probably help them fix the roof first. The only way I would do that, though, is if they agree to let you help them address the reasons they don’t have any money. If you have the cash, go ahead and pay for the roof. But let them know they must pay you back by getting some financial counseling.
I know you love your mom and dad, and they work too hard to be broke. We’re not talking about you shaming or condemning them in any way. Talk to them in a loving, caring way, but you have to address the situation. If they’ve worked all their lives and can’t come up with $3,000, something’s wrong. The fact they don’t have any money is the symptom. The problem is they’ve mishandled the dollars they earned. Even if you don’t make a lot, you can have cash set aside for emergencies if you manage it well.
You’re a young guy making good money, so there’s no reason you can’t do both things quickly. Help your folks with the roof, then turn around and knock out that student loan debt. It won’t be a huge burden to you. But remember, you fixing their lives without them fixing their lives will be a burden — to all of you!
— Dave
Dear Dave,
We’re debt-free except for our house. I’ve been talking to a friend about how much money to allow for fun in your budget. The other day we bought a $100 bottle of wine, and she thought that was unreasonable. What’s your opinion?
Beth
Dear Beth,
Something like that depends entirely on your overall financial situation. Buying a $100 bottle of wine is pretty stupid if you only make $20,000 a year. It’s not unreasonable, though, if you make $200,000 a year. Having a great income-to-asset ratio and living debt-free gives you the opportunity to relax and enjoy a few things.
You’ve got to take the whole picture into account. I know a guy who makes well over $15 million a year, and he bought a $200,000 car. As a ratio, that’s a very small percentage of his income. So, it’s kind of silly to say an item is too expensive, or an irresponsible purchase, based on price alone.
— Dave
* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.
