DAVE SAYS

Dear Dave,

My wife and I owe about $40,000 on our mortgage. My father-in-law, who is a very nice and generous man, said he wants to pay off the house for us, then let us pay him back over time. We’ve borrowed muchsmalleramounts of money from him in the past, and we were always able to repay it with no issues and no pressure. How do you feel about us taking him up on his offer?

Seth Dear Seth,

Iunderstandyouandyour wife have been fortunate in these kinds of situations over the years. And I know your father-in-law would probably be a lot easier to work with than a mortgage company when it comes to the size and frequency of payments. But I still think you’re playing with fire if you take him up on the offer.

I assume your father-inlaw is doing pretty well financially, since he can afford to make this offer. But the downside is just too risky. If I were him, I might offer to pay off the mortgage as a gift to my daughter and son-in-law. Butaloan?Noway.Thereare no strings attached to a gift that comes from the heart.

Don’t get me wrong, Seth. I’m not bad-mouthing your father-in-law. What he’s making is a very generous offer, and it’s an incredibly nice thing to do. But in my mind, a very important consideration is being left out of the equation, and it’s a spiritual issue. The borrower is always slave to the lender. Always. And sadly enough, nowhere is that more true than within a family.

Accepting this offer could bring instant discomfort into the relationship for you and your wife. This money situation is likely to hang over things like a dark cloud. Thanksgiving, Christmas and other special occasions will feel different—and kind of weird—when you’re suddenly celebrating with your mortgage lender instead of just good, old dad.

Even if you come from a reasonable, stable family, and it sounds to me like your in-lawsareverygood-hearted folks, this debt will always be in the back of your mind. But if you’re involved with a dysfunctional or controlling family, that tension is going to be right there—constantly. I’d thank your father-inlaw for his generosity and for the offer. But in my mind, it’s just not worth the risk.

— Dave Dear Dave,

Our son will be graduating from high school in May, and then heading off to college in August. He will also be working during the summer to save up money for school. When classes begin, do you think he should continue working a part-time job, or would it be better for him to focus solely on his studies?

Brenda Dear Brenda,

There’s really nothing wrong with either approach, especially during a kid’s first semester in college. As a parent, though, I’d urge you not to fall into the trap of thinking his grades will go down if he holds a job while in school. Research actually shows that, on average, kids who work while in college carry higher grade point averages than those who don’t.

The reasons for this differ, depending on who you ask, but I think a lot of it has to do with them having to learn to manage their time—and their lives—more effectively. Lots of kids could pay their way through school, and not have to worry about student loans, if they just used some of the time they spend watching television and on social activities at a job.

We never required our kids to work during the school year, but they were self-starters. And when they came home for the summer, there was no such thing as just lying around the house all day. They had jobs, and they made money. Of course, someofitwenttowardhaving a little fun during their time off. But we made sure they set some aside for the next school year, too.

Long story short, the philosophy of not wanting kids at college to work so they can spend all their time studyingiswell-meaning,but misguided.Forthemostpart, kids who work while they’re in school will make better grades and develop into more mature and well-rounded individuals.

I hope this helps, Brenda!

—Dave Dear Dave,

I’m trying to work my way out of debt, but it seems like something always happens to stall things or knock me backwards. I make $55,000 a year, I’m single and I have $15,000 in debt, along with a mortgage payment of $1,224 a month. I’ve been trying to live on a budget, but I’m still not sure where all my money goes. Can you help?

Lindley Dear Lindley,

I know living on a budget can be hard at first. And honestly, it usually takes folks who are new to doing it about three or four months of practice before they start getting it right and seeing the results.

For starters, your house payment is a little heavy for someone making $55,000 a year. I generally recommend keeping your mortgage or rent payment at about 25% ofyourtake-homepay.Sometimes you can slide by paying a little more, but in those cases, you’d really have to be ontopofyourfinances.So,the biggest thing you can do right now is take control of your money, instead of letting it— or a lack of it—control you. And the best way to make all this happen is by consistently living on a realistic, written monthly budget.

Once you start doing this, you’ve taken your first big step toward having a real gameplan for your money. At that point, the idea of trying to live on a budget ends, and the fact that you are living on a budget, and telling your money what to do—instead of a lack of it dictating what you can do—becomes more of a reality.

Remember the Star Wars movie “The Empire Strikes Back”? At one point during Luke’s training, Yoda tells him, “Do, or do not. There is no try.” In a larger sense, Yoda is urging Luke to focus and work harder, instead of continuing with half-hearted attempts and giving up easily. If you want to accomplish a difficult task, Lindley, you have to throw yourself into it completely. You must fully commit, and stop making excuses. You have to focus, and fight to make it happen. It’s no fun waking up broke at the end of every pay period. We both know this. So, put your head down and get your mind in gear. Make. This. Happen.

You can do it!

—Dave