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.
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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?"
The problem with being an enabler
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: Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
The daughter’s financial situation
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.
Josephine said they haven’t been tackling that debt aggressively because they’re hoping the student loans will be forgiven. But as Ramsey said, that’s unlikely to happen.
"They have significant discipline issues," he continued. "It’s OK to be a mom that loves… but you don’t want to be an enabler."
His core concern is that if Josephine bails her kids out, they won’t establish smart financial habits that allow them to be financially secure for the long haul.
Ramsey’s suggestion
An estimated 18.5 million millennials owe money in student loans. And the average balance among members of that generation was $40,438 as of early 2024, according to the Education Data Initiative.
So while Josephine’s daughter and son-in-law are not alone in owing large sums of money, they need to start getting ahead of their debt instead of waiting for the government to bail them out.
Ramsey suggests that Josephine tell the pair that if they pay down $10,000 on their student loans, she’ll put $10,000 toward those loans, too, up to $30,000. She could also offer to give them $5,000 toward a replacement car once they can show that they’ve saved the other $5,000.
“That’s helping them on a path that’s positive,” he said. “That’s not you writing checks for misbehavior.”
Ramsey also thinks the pair needs to hear a few home truths about the importance of following a budget, saving for big expenses, and getting ahead of debt, all with the aim of establishing smart financial habits. He feels that based on their income, they earn enough money to be able to pay down debt and save for big expenses themselves.
“I want them fishing for life,” he said. “Not fishing for a day.”
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