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Ask Dave

Do Right With This Inheritance

Deanna says her mother passed away and left a $30,000 inheritance for Deanna and her siblings. Deanna is wondering what should she spend it on.

QUESTION: Deanna in Lexington says her mother passed away and left a $30,000 inheritance for Deanna and her siblings. Deanna is wondering what should she spend it on.

ANSWER: Let me tell you that $30,000 is going to be gone so fast that you won’t even know you’ve got it if you and your husband don’t straighten up. You will find something that’s going to happen, because $30,000 is not enough to change your life.

Instead, it could be the wake-up call for you and your husband to change your lives, and this $30,000 is going to be the pilot light. It’s going to prime the pump.

If you do exactly the things I tell you to do with it, and then you stop doing smart things with money, you’ll be right back in the same mess in 12 months, because this is about behaviors and behaving. I can’t just give you one piece of advice about what to do with the money and then you’ll be all right. You need to fix the deal with your life, and as you fix that, it’s going to change everything.

I’ll give you some instruction right now to help you get started. But I want you to know that what I’m telling you is completely worthless if you guys don’t address this overall thing. Part of the program is getting your husband involved, because both of you need to be working together. Otherwise you are trying to climb uphill dragging an anchor behind you, and that really gets old and it’s going to start affecting your marriage.

When both of you were irresponsible, it was all right with everybody. Now that one of you has decided to be responsible and the other one hasn’t, that’s going to get old fast. We have to get you and him working together as a man and woman, not two little kids who got married.

Hook up with one of my Endorsed Local Providers for investing. They can help you set up a program for your kids’ college with the $22,000 your daughter has in a decent mutual fund. You’ll do some of that money in an Educational Savings Account and some of it in a 529 plan. Just move that money over there and forget you’ve got it. Start talking to that kid about being responsible and doing better than you did. Start teaching her this stuff.

Then you and your husband need to go to Financial Peace University. If you go without him, it will cause a divorce because you’re going to start to see how bad you guys are and how much work you’ve got to do, and you’ll be angry at him every time you look at him because he’s not helping.

I don’t want to cause a problem for you—I want to be a blessing to you. From that money, the first thing we tell you to do is put $1,000 aside as Baby Step 1. Baby Step 2 is to become debt-free except your home. His motorcycle needs to be sold. You could pay off his $16,000 truck and your $10,000 student loan, and we’d still have your $25,000 car.

But that will only work if you continue to attack your car and get it paid off with both of you working together very aggressively, and that motorcycle needs to be sold. There’s nothing wrong with motorcycles, but it’s a toy, and we pay cash for toys, even when we’re grownups. Otherwise we’re babies running around in adult bodies buying crap we can’t afford because we want it and we work hard. Oh brother! That’s how people think when they’re broke.

You’ve got to break that cycle. I can show you how to do it, but I have to tell you, from what you’re describing of where you are today and where you need to be, you are going to have a long year. A lot of that year, you’re going to cuss Dave Ramsey. And I’m good with that.