Josephine, a retiree living in Florida, called into the Ramsey Show to get advice on helping her daughter and son-in-law financially.
While she feels that it’s important to give her daughter’s family a leg up, her husband disagrees and feels his daughter and son-in-law should manage their own bills and should not get a handout.
Josephine and her husband are comfortable financially, and can afford the $30,000 gift she proposes. She hopes it will enable her son-in-law to buy a new car and pay down some student debt.
Ramsey said that both Josephine and her husband are neglecting to answer a key question: “What's best for the kid?”
Ramsey acknowledged that Josephine has good intentions. As she explained, her daughter and son-in-law are not asking for money. She just feels that she wants to help.
The daughter and son-in-law live frugally in a modest house, and have no car payments. However, the son-in-law has been driving a “beater” for the past few years and the daughter's car needs to be replaced. He also has a lot of student debt to get ahead of.
Ramsey asked Josephine how much her daughter and son-in-law earn to help figure out why they would need her financial assistance. When she told him they earn $180,000 per year, he laughed and said, “You've got to be kidding me.”
Josephine explained that they have two kids, which eats up a lot of their income. But Ramsey didn't buy it.
“They're pissing their money away,” he insisted.
In terms of answering the question of whether Josephine and her husband should gift their daughter money, Ramsey said, “Neither one of you are right. Both of you are wrong.”
Read more: Do you own rental properties in the US? These 6 hacks can help you boost your income and lower your tax burden
Josephine's daughter and son-in-law live in Michigan, where the cost of living is lower than average. BestPlaces data shows that Michigan is about 8.5% cheaper than the average U.S. state in terms of living costs, and that a minimum annual income of $41,760 is needed for a family to live comfortably. So in Ramsey's mind, there's no reason Josephine’s daughter and son-in-law can't afford to buy a modest car and pay off their student debt.
