Dear Dave: My wife and I have been helping our adopted daughter financially for some time. She’s 25, has been married for three years, and we don’t see this cycle stopping anytime soon. The worst part is, they will often throw in that our grandchild will go without something unless we help. We’re certain this isn’t teaching them to stand on their own feet, but we don’t know what else to do.
Dear David: You’re right about one thing. It’s time they both learned how to handle money like mature, responsible adults. I don’t know how much your tried to teach her about finances when she was growing up, but it sounds like this “needing help” thing is turning into an endless cycle.
You’re giving them money left and right, and it’s not working. They get no more money from you unless they get financial counseling together and make a serious move toward straightening up their lives.
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If they try to play on your feelings by saying your grandchild is hungry, tell them to send the child over for a meal. If they run out of money until payday, tell them to go to their financial counseling session to find answers.
Love them well. Hold their hands and say, “When I was your age, I wish someone had done this for me. I’m not going to give you any more money unless you go to financial counseling sessions regularly and together. If you do this, turn in a budget to us and let us coach you on how to be adults and handle your own money well, we’ll help and set up a matching system. If you don’t do the matching part though, you won’t see anything from us.”
They’ve figured out if they hold your feet to the fire when it comes to this grandbaby, you’re going to open the wallet. They’re playing you right now, and it’s not to their benefit — or yours.
Dear Dave: I have an opportunity to take a loan against my 401(k) retirement, and pay myself interest. Is this a good idea?
Dear Susan: Actually, you’ll end up costing yourself interest. Never take a loan against your retirement!
When you pay interest against your retirement, you cost yourself interest. If you leave the company — which you will someday — the loan against the 401(k) is due within 60 days. If you don’t pay it off, they consider it an early withdrawal and you’ll get taxed and penalized big-time.
If you have a certifiable emergency, like owing the IRS or facing a foreclosure, you may have to withdraw some. You’ll still get taxed, but please don’t ever borrow against retirement.
Dave Ramsey is CEO of Ramsey Solutions. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.