Dear Dave,

I’m an anesthesiologist, and I make between $260,000 and $270,000 a year. My wife is a stay-at-home mom who takes care of our preschool-age kids. We have about $50,000 in a retirement fund, $50,000 in consumer debt, $220,000 in student loan debt, and we owe $280,000 on our house, which is worth around $500,000. We’re thinking about using our retirement fund to pay off credit cards and such, then selling the house and using the money to pay off the student loans. After that, we’d live in an apartment for a while, save up 20% or more for a down payment on the next home, and do things right financially moving forward. What do you think about this game plan?

Jake

Dear Jake,

Wow, I really appreciate your motivation, man. You’re willing to do whatever it takes, and that’s pretty cool. Not many people have the determination to do the kinds of things you’re talking about.

I almost never tell people to sell their homes. If you actually can’t afford it, that’s one thing—and in that case, we’d sell the house. If it’s the only way to avoid bankruptcy, we’d get rid of it in a heartbeat. But in your case, things are a little different. You’re in a pretty deep hole, but your income as an anesthesiologist gives you a really big shovel you can use to carve out some steps, get up out of that hole, and fill it in so you never fall in again.

Now, this is going to mean some real lifestyle changes for a few years. I’m talking about beans and rice, and no vacations. There’s no more living like a rich doctor, because you’re not a rich doctor—you’re a broke doctor. We’re going to temporarily stop adding to your retirement fund, not cash it out, and we’re going to start living on a written, monthly budget where every single dollar is given a name and a purpose.

Cleaning up $270,000 of debt sounds scary. But with a $260,000 income and the other changes we talked about, you could put $90,000 a year toward all this and have it completely cleaned up in just three years. That’s what I’d do if I woke up in your shoes. It will set you free for the rest of your lives to invest and save.

Get on it, doc. You can do this!

— Dave

 Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show.” He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business and many more. Since 1992, Dave has helped people regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

Dear Dave,

The other day, my wife and I discovered a Thrift Savings Plan (TSP) we’d forgotten about for over 10 years from my time in the Army. There’s a little over $3,200 in there. We’re both in our thirties, and we’re trying to save up our starter emergency fund in Baby Step 1 of your plan. We were wondering if we should withdraw the money and use it toward Baby Steps 1 and 2, or just leave it in there.

Todd

Dear Todd,

The best thing to do is roll the money over into an IRA. Otherwise you’re going to be hit with a 10% penalty—plus your tax rate—and end up paying 30% to 40% of it to the government. That’s kind of like asking, “Would it be a good idea to borrow $3,200 at 30% interest to pay off debt?” Of course not! That would be a really dumb idea. And in a sense, that’s what you’d be doing by just taking the money out of the TSP.

It's not a ton of money, but conceptually, I hate the idea of giving the government 30% to 40% of my money just to get my money out. So yeah, do some research, find a good investment professional near you—one with the heart of a teacher—and roll it into an IRA.

Congratulations to you and your wife for deciding to take control of your money. And thank you for your service to our country, Todd. I hope this helped.

— Dave

 Dave Ramsey is an eight-time national bestselling author, personal finance expert and host of “The Ramsey Show,” heard by more than 18 million listeners. He has appeared on “Good Morning America,” “CBS This Morning,” “Today,” Fox News, CNN, Fox Business and many more. Since 1992, Dave has helped people regain control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions.

Dear Dave,

My parents are both in their seventies. They have been healthy and active all their lives, but in spite of them both having good jobs they neglected to plan and save for retirement. Is it my responsibility now to provide them with financial help in their old age?

Reagan

Dear Reagan,

It sounds like you might be a little irritated that your parents haven’t been responsible with their money. The way you described the circumstances, it’s understandable—to a point. But in my mind, there’s a bigger question when it comes to helping your folks. How big is the burden?

Let me ask you a few things. Do you have the money to help? Now, can you provide this help without your own family suffering or going without? If both answers are yes, I think your question may be a little more about your own aggravation with your folks than any ethical or moral obligation.

A few years ago I spoke with a guy who was in really good shape financially. He made over $1 million a year, and he had plenty set aside in savings and retirement accounts. His father was in poor health and had never handled his money wisely. The son asked me if he should help out his dad by giving him some money every month.

In my mind, there’s no question the right answer was yes. And that’s what I told him. If you’re making millions, but don’t want to help out your sick dad, there’s something wrong with you. There’s something missing inside you that money just won’t fix. However, if you and your family are barely getting by—let’s say you bring home $3,000 a month—you’re not morally required to help a parent who was irresponsible with money their entire life.

I’m not sure what your situation is, Reagan, but I hope you’ll look at things with a little grace and reason. It’s a tough situation to be in, because it sounds like your heart is being pulled in different directions. My advice, above all else, is to pray about it. And, if you have a spouse, talk to them about everything, and make sure the two of you are in agreement on what should be done before moving forward.

God bless you, friend.

— Dave

* Dave Ramsey is an eight-time national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

Dear Dave,

I’m single, and I make $35,000 a year. Next year, my salary and bonuses should be around $50,000. I have a little over $30,000 in debt right now, including student loans, and I’m not sure how I’ll be able to keep up with bills and everything else right now if I have to save $1,000 for a starter emergency fund like you recommend. Can I get by with a starter emergency fund of $500?

Jonas

Dear Jonas,

I really think you’re making this whole thing sound a lot harder than it really is. They key is making and living on a budget, and that’s not rocket science. It’s a simple, written planning process where you give a name and a job to every dollar you make before the month begins.

Food, shelter, clothing, transportation and utilities are necessities, so they come first. After that, make sure you’re current on your debts. Once all that is out of the way, put every spare dollar you can into your emergency fund. If you do this with a sense of urgency, and limit spending to necessities, you’ll be surprised by how fast it will happen. And you’ll love the newfound sense of security.

The truth is you really need a starter emergency fund of $1,000 if you’re at a point in life where student loans and other debts are in the picture. That may seem like an impossible goal right now, but it should be your first priority. And a written, monthly budget will go a long way toward helping you achieve that goal.

You can do this, Jonas!

— Dave

* Dave Ramsey is an eight-time national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.