Dave Ramsey says: There’s going to be sacrifice to get family finances straight

Dear Dave,

I bring home about $2,800 a month, and our mortgage payment is $1,100. We have been forced to take money out of our savings account occasionally over the last year or so to help pay the bills.

My wife loves being a stay-at-home mom with our two preschool kids, but even she is talking about finding a daycare for the kids so she can go back to work and help out financially.

How do you feel about this idea and our situation?

– Cade

Dear Cade,

I can’t blame your wife for loving the idea of staying home with your kids when they’re so young. Being a stay-at-home mom is a great thing if you can make the numbers work. Still, I’m sure it’s no picnic trying to live on $1,700 a month with two little ones in the mix.

Let’s look at it like a math problem with three components — house payment, income and lifestyle. Forty percent of your pay is going toward your home. That’s way too much. Your mortgage payment or rent should never be more than 25% of your take home pay. I suppose you could look into the possibility of refinancing your home, but that’s not going to solve all your problems.

One option would be finding a way to generate some extra income, whether that means a part-time job nights or weekends, or pursuing additional education or certifications to get your income level up at work.

Another is to sell the house and find a less expensive alternative, but I’m never a big fan of that idea — especially in a family situation — unless there’s absolutely no other way to avoid bankruptcy or foreclosure.

I think you and your wife need to sit down, and spend some serious heart-to-heart time talking things over, crunching the numbers and creating a plan.

There’s going to be some sacrifice involved for everyone, and only you two can decide what’s worth it and what isn’t — for you two and your kids.

God bless you and your family, Cade.

— Dave

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