Dear Dave, 

My wife and I are debt-free except for our mortgage and two Parent PLUS loans for our daughters’ college educations. One of the loans totals $18,078, and the other is for $41,500. Both girls want to pay them off using the new extended plan being offered, but I’m 59 1/2, and I’ve got about $500,000 in a 401(k) from a previous job along with $125,000 from a job I started five years ago. We’ve been thinking about just paying the loans off for the girls, but we wanted to know your thoughts.  

Mike 

Dear Mike, 

If I were in your shoes, I’d just go ahead and pay them off. Technically, you’re liable for the loans. They are not.  

The extended plan you’re talking about is garbage. In reality, it means the loans are never paid back. The extended plan is 30 years of not even making the principal payment. No interest is paid, and they don’t touch the principal. The whole thing works backward for 30 years, and it’s the very definition of a stupid government program.  

I really don’t think you want your daughters to be part of something like this. But that means you’re going to be stuck with paying off these loans. You might as well just own it and pay them off now.  

I want you to understand this, Mike. I don’t advise people to dip into their savings every time a problem comes up prior to retirement. But you’re 59 1/2, and at that point there’s no penalty. Plus, you’ve got $625,000 sitting there. You’re going to pull less than $60,000 out, plus a little in taxes, to make the problem go away. It’s not as bad as it could be, but I’m afraid you’re going to have to pay a little stupid tax on this one. I’m sure your girls didn’t know all this, but it’s a perfect example of what can happen when you put your faith in a stupid plan coming out of Washington, D.C.  

I hate it for you guys—and everyone else in America who took out a bunch of student loans—because you’re getting messed over by your own government. The first way they messed you over was to put a student loan program out there and then tell you the way to success was to borrow tens and hundreds of thousands of dollars for a degree in left-handed puppetry. And now, guess what? You’re a barista! Then, they start shouting they’re going to forgive it all. After that it’s, “No, we’re not. Yes, we are. No, we’re not. Yes, we are.”  

The fact is, they don’t intend to forgive it. It’s the biggest scam in history—mathematically speaking—perpetrated on the American public by our government.  

— 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 take control of their money, build wealth, and enhance their lives. He also serves as CEO of Ramsey Solutions. 

Dear Dave, 

My husband and I have just $12,000 to pay off before we’re debt-free. We’ve paid off almost $70,000 in debt in the last two years, and we both just turned 50. We would like to buy a house soon, but we know we need an emergency fund. It would take us over a year to build up an emergency fund, so since we’re getting older, should we make adjustments to the Baby Steps? 

Debbie 

Dear Debbie, 

You’ve been making great progress, and you obviously have a good income to be able to pay off debt that quickly. But it shouldn’t take you two a year to build up an emergency fund, considering the rate at which you’ve been paying off debt.  

Yes, you need a fully funded emergency fund of three to six months of expenses set aside before you start saving a down payment for a home. Maybe in your case, you could lean a little more toward the three-month side with your emergency fund. Then, after you’re all moved in, you could revisit the emergency fund and beef it up to six months. 

Fifty isn’t old, Debbie. Just stay on course and stick with the plan. You two have plenty of time to get your finances in order and find a great home! 

—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 take control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions. 

Dear Dave, 

Our daughter’s college education is pretty much paid for already through grants and scholarships, and my wife and I make good money. We just started your plan, so when we get to Baby Step 5, saving for college, can we substitute that with saving for a wedding? 

Benton 

Dear Benton, 

I’m glad you’re thinking ahead, buddy. And I don’t have a problem with your idea. It’s always a good plan to save for a wedding, if you have the financial resources to do so. 

Did you know the average wedding in America this year, according to Zola.com, ran around $29,000? Of course, you don’t have to pay anything close to that amount to make a wedding a beautiful and memorable occasion. Your household income, debt, savings and other factors will all play a part in how much you can legitimately afford

Sit down with your wife, crunch some numbers and see what makes sense in your situation. Just remember to pay cash for the wedding. If you have to go into debt to make it happen, you’re spending way too much!  

—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 take control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions. 

Dear Dave,  

My husband and I want to do a live-in and flip real estate purchase. The idea is to buy a fixer-upper and rent out the basement to help with the mortgage payments. How do you feel about ideas like this?  

Erin  

Dear Erin,  

In a situation like this you need to do a basic business analysis. You’ve got to have a plan in place, and you’ve got to figure out the worst-case scenario. Part of this is determining whether you can survive if things fall apart. In this case, the worst case is that you can’t get a renter, and the house doesn’t sell. It puts your family in jeopardy, so to me it’s not an option.

Want my honest opinion? I think you’ve both got a case of house fever right now. The possibility I just mentioned isn’t a rare occurrence. Lots of people have had the same idea, with the best of intentions, and still wound up in a big mess. I love real estate. I mean I really love real estate. And I’ve flipped more than a few houses in my day. But the particulars of this deal make me a little nervous. If you and your husband are willing to accept the possibility of things not working out like you planned—and the fact you might have to take additional jobs for an unknown length of time just to make ends meet—then it might be a play. But for me? Nope. I don’t like putting myself into these kinds of situations.  

When I was much younger, I was willing to do all kinds of dangerous stuff and ignore the risk. But going broke decades ago knocked that kind of thinking out of me in a hurry. Any deal that runs the risk of leaving you bankrupt, or the victim of a foreclosure, just isn’t worth it, Erin.  

—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 take control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.  

Dear Dave,

My fiancée and I plan to get married in May, and we are preparing to buy a house. We both work in sales, and combined we bring home about $7,400 a month before commissions. Our average commissions usually boost that to $12,000 a month. I’m worried that the house we’re looking at doesn’t fit our budget, though. The home costs $350,000, and we’re looking at monthly payments of $2,840 with taxes and insurance figured in. Do you think this scenario will work for us?  

J.T.  

Dear J.T.,  

Are you doing this on a 15-year fixed-rate mortgage? If you’re not, you need to change that right away. That’s the only kind of mortgage loan I recommend. With the numbers you’ve given me, you two can afford that on the shorter terms I mentioned.  

Now, let’s move on to the next thing. You’re speaking about buying a home as if you’re already married, and you’re not. I will not advise you to buy a house with someone to whom you’re not married. You’re talking to a guy who’s been doing this for 35 years, and I’ve heard all the horror stories that go along with, “We bought the house together, but we didn’t make it to the altar together.” Talk about an ugly breakup!  

You two have a bad case of house fever right now. Believe it or not, you aren’t required by law to run out and buy a home just because you’re planning to get married. Please, wait until after the wedding to buy a home. And even then, wait another year or so. Buying a home is the biggest—and most expensive—life decision most people ever make. Take some time to just enjoy being married and getting to know each other even better for a while.  

Listen, if you’ve already jumped the gun, if you already have this house under contract or anything like that, I would not close the deal. I’d talk to the sellers and tell them they can keep my earnest money, but I’m walking away. And get ready, because if you do this, your fiancée is liable to look at you like you’ve got snakes coming out of your ears. Make sure to communicate with her about where you’re coming from and why you’re doing it. It’s the best, and smartest, thing you can do in the long run, J.T.  

I’m not predicting you two are going to break up or anything. I hope with all my heart nothing like that happens. But I’m begging you, buddy. Don’t buy a home with someone you’re not legally married to. The potential downside is just too great.  

— 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 take control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.