Should We Be Living With My Grandma?
7th February 2024 | ⏰ 00:04:27
Should We Be Living With My Grandma?
TLDR: Amanda and her husband moved in with her elderly grandmother to assist her with her needs. They are contemplating moving out and renting a place for $1,200 per month. They are concerned about their grandmother's care, as their parents would take over if they moved out. Amanda and her husband have $70,000 in debt and a combined income of $73,000. Dave suggests that instead of moving into a $1,200 rental, they should find a cheaper place under $1,000 to rent and use the extra money to pay off their debts faster.
Dave Ramsey Show Transcript
Host: Amanda, welcome to the Dave Ramsey Show. What's your question today?
Caller: Hi Dave, thank you for taking my call. My husband and I moved in with my elderly grandmother to help care for her because she's showing signs of dementia. Now we're considering moving out, but we're worried about the financial implications. We're currently paying $625 in rent, and the new place we're looking at would be $1,200 a month. We're trying to follow the principles in your book, "Total Money Makeover," to get out of debt. Should we move out now?
Dave Ramsey: Well, Amanda, let's take a closer look at your financial situation. How much debt do you and your husband have?
Caller: We have about $74,000 in debt.
Dave Ramsey: Okay. And what's your household income?
Caller: Our household income is $73,000.
Dave Ramsey: And how many kids do you have?
Caller: We have no kids, just me and my husband.
Dave Ramsey: Alright, so let's analyze your situation. If you move out and rent a place for $1,200 a month, that's a $575 increase in your monthly rent compared to your current $625 rent. That translates to an additional $6,900 in annual rent expense.
Caller: Yes, that's right.
Dave Ramsey: Now, you mentioned that your parents want to move in with your grandmother if you move out. Your parents currently don't have a place of their own and are staying with friends. They receive military benefits totaling $625 per month.
Caller: Correct, that's all they have coming in.
Dave Ramsey: So, if they move in with your grandmother, they'll essentially be replacing you and your husband in terms of providing care for her. They won't have to pay rent, but they'll also lose out on the $625 in military benefits they're currently receiving.
Caller: Yes, that's true.
Dave Ramsey: Okay, let's consider the financial implications of this move. If you move out and pay $1,200 in rent, your additional annual rent expense will be $6,900. However, your parents will no longer receive their $625 monthly military benefits, which amounts to an annual loss of $7,500. So, financially, your family will be worse off by $600 per year if you move out.
Caller: I see. That's helpful to know.
Dave Ramsey: Additionally, moving out may also mean that you and your husband will have more time to pick up extra jobs to accelerate your debt repayment. You mentioned that you're following the principles in "Total Money Makeover," which encourages you to work extra jobs and side hustles to pay down debt faster. If you move out and have more time available, you could potentially earn more money and make a bigger dent in your debt.
Caller: That's a good point. We hadn't thought about that.
Dave Ramsey: So, Amanda, based on the information you've provided, I would recommend that you and your husband stay in your current living situation for now. The financial implications of moving out don't seem to outweigh the benefits. Instead, focus on increasing your income and reducing your expenses to pay down your debt faster. Once you've made significant progress on your debt repayment journey, you can reevaluate your living situation and decide if moving out is the right choice for you.
Q1: Why is Amanda and her husband considering moving out of their current living situation?
A1: Amanda and her husband are considering moving out of their current living situation because their grandmother, who they moved in with to provide assistance due to concerns about her health and dementia, is getting older and they believe it would be better for their parents to move in and take care of her. Additionally, they are looking to improve their financial situation by reducing their rent and focusing on paying off their debt.
Q2: What is the current household income and debt situation for Amanda and her husband?
A2: Amanda and her husband have a household income of $73,000 annually. They currently have $70,000 in debt. Their current rent is $625 per month, and they are considering moving to a place with rent of $1,200 per month.
Q3: What are the potential financial implications of moving to a new place with higher rent?
A3: If Amanda and her husband move to a new place with rent of $1,200 per month, they will have to pay an additional $575 per month in rent compared to their current situation. This would result in an additional expense of $6,900 per year.
Q4: What are the pros and cons of staying in their current living situation versus moving to a new place?
A4: Pros of staying:
- Lower rent, saving $6,900 per year
- Ability to continue providing care for their grandmother
Cons of staying:
- Less space and privacy
- Potential for conflict or tension with parents
Pros of moving:
- More space and privacy
- Opportunity to live closer to work or other desired amenities
- Potential for better schools or other community resources
Cons of moving:
- Higher rent, costing an additional $6,900 per year
- Need to find a new place to live
- Inconvenience of moving
Q5: What is Dave Ramsey's advice for Amanda and her husband?
A5: Dave Ramsey advises Amanda and her husband to consider renting a place for less than $1,000 per month and suggests that they get extra jobs to accelerate their debt repayment. He believes that the amount they would save by moving to a cheaper place would not be significant enough to justify staying in their current situation, especially since they have a substantial amount of debt to pay off.