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Dave Says: What to do with the leftover?

Dave Ramsey • Updated Jun 12, 2017 at 10:00 AM

Dear Dave,

When you use the envelope system, what should you do with any leftover money?

Mandy

Dear Mandy,

My suggestion would be to carry it over to the next month. Lots of folks don’t use all the money in their clothing envelope during a month. There’s nothing wrong with letting a little extra build up in one of your categories if you don’t spend it all in a given month or two.

You should be hitting the budget pretty close each month on categories like food. Getting out of debt and managing your money wisely doesn’t mean going hungry. If you do end up with a little left over in the food envelope, treat yourself to a nice dinner out, or buy something that’s food-oriented.

But it’s okay to carry a few categories over from month to month. Just make sure you don’t get crazy and blow that money on something outside the intended category, or on stuff you really don’t need.

—Dave

 Too much risk

Dear Dave,

I have some company stock my grandparents bought for me years ago. Would be a good idea to cash out the stock and roll it into an IRA?

Dylan

Dear Dylan,

Technically, you wouldn’t be rolling it into an IRA. You would cash it out and use the money to establish a Roth IRA. And yes, I would do that.

It was very kind of your grandparents to buy you a gift like this, but I think you can do better. You didn’t mention an amount, but let’s say you’ve got $10,000 in that company’s stock. Now, would you buy the stock if you had $10,000 sitting on the table? Most people, myself included, would say no because there’s too much risk. I wouldn’t advise having the majority of your wealth – the highest percentage of your net worth – tied up in one single company. That’s bad news.

So yes, I would sell that stock and use the money to fund a Roth IRA or multiple Roth IRAs. I invest my Roth IRA money in mutual funds that have a solid track record of outperforming the S&P 500 for 10 years or longer.

Asking family for help 

Dear Dave,

My mom and dad filed bankruptcy recently and are on a fixed income of $2,200 a month. They gave up their house, and my wife and I helped them find an apartment. We’re also trying to give them other help while they’re getting back on their feet. The problem is, we’re paying off debt and trying to get our own finances in better shape. I think my sister should help out some, too, but I’m not sure how to approach her about this.

Randy

Dear Randy,

It’s not out of line to ask her to help and then gauge her interest and willingness. I mean it’s your parents we’re talking about. Still, you can’t force someone to do something they can’t do or simply don’t want to do.

Before you approach your sister, you might try working up a monthly budget on your parents. It doesn’t have to be complicated – just a one-page document showing their situation. Let her see that mom and dad are struggling right now, and suggest that you both chip in a little each month until they’re back on their feet financially.

Don’t point fingers or make accusations, because that will ruin things in a hurry. Family should always try to pull together in times like this, Randy. In most cases, things like this work out fine and family bonds become even stronger.

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including “The Total Money Makeover.” The Dave Ramsey Show is heard by more than 13 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.

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