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Mother-in-law moved in: How to get by?

My husband and I are both 50, and we make about $50,000 a year. We have a little bit of debt, and recently my mother-in-law moved in with us due to health issues. We’ve always gotten by, but now we’re struggling with the additional expense of having her with us. We love her, but we’re unsure what to do financially. Do you have any suggestions?

Author and radio talk show host Dave Ramsey.
Author and radio talk show host Dave Ramsey.Read more

Dear Dave,

My husband and I are both 50, and we make about $50,000 a year. We have a little bit of debt, and recently my mother-in-law moved in with us due to health issues. We've always gotten by, but now we're struggling with the additional expense of having her with us. We love her, but we're unsure what to do financially. Do you have any suggestions?

Jen

Dear Jen,

Anytime things get tight and something like that happens, it's your wake-up call. It's the phone ringing, so I'm going to tell you to pick up the phone. It's telling you that you've been kind of sloppy and disorganized with your finances in the past, but you've made just enough money to get away with it.

Her moving in tightened things up, and that's understandable to a point. But it has shone a spotlight on the fact that you're going to have to start doing a written plan and behaving. Chances are you're going to have to cut back on some stuff, because you've chosen to take care of her. This is an honorable choice and a wonderful thing you're doing, by the way.

With this added responsibility you've taken on — and many Americans are facing the same thing — you're going to find yourselves on one end of the Sandwich Generation. They're sandwiched between taking care of their parents and taking care of their grown kids. And the way you handle it is with a written budget.

The good news is that with a detailed plan, you can analyze whether you need extra income, if you need to cut some expenses or both. You've got to create a little margin to have a clear picture of your future. If you just wander along without a plan, you're going to make a mess out of this, and it's going to get bad fast.

-Dave

Dave Ramsey is America's trusted voice on money and business. He has authored five New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover,EntreLeadership and Smart Money Smart Kids. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

I’m debt-free except for my home, and I’ll have that paid off in about 12 months. I currently make $60,000 a year and live in an area of Florida that is designated a flood plain,

because a river that empties into Tampa Bay runs behind my home. Currently, I’m paying $1,070 a month for flood insurance. My house is worth $325,000, and water has only come up into

the yard twice in over 20 years. Since I’m doing pretty well financially, do you think I need to keep my flood insurance policy?

Trudy

Dear Trudy,

From what you’ve told me about the history of your property, it sounds like your biggest concern might be if a hurricane caused a backwash in your area. Insurance is already pretty

tough in Florida when it comes to those kinds of things, but you don’t want to run the risk of your house getting mowed down and losing everything.

If I were in your shoes, I think I’d like the protection of flood insurance. What you’re paying for the policy is such a small percentage of your world, compared to the value of your

home and your income. Keep the coverage, Trudy!