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Ramsey column: A very generous offer

Dave Ramsey
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Siskiyou Daily News

Dear Dave,

My in-laws have very generously offered my wife and me $250,000 to help with a down payment on a home. I know the amount exceeds the IRS’s yearly gift allowance, but they want to structure it as a family loan and have already told us they don’t care if we pay it back. If we accept, we technically owe them a lot of money. If we say no, they may be offended. What do you think about this and how it might impact the relationship?   

James

Dear James,

Well, it makes sense your wife would be on board with the whole thing. It’s her dad making the offer, so of course, she would be a lot more comfortable with the idea than you are.

This is a big deal, and it’s something you two should have a very serious conversation about. Get on the same page in every regard. Also, I’d recommend making sure you get everything in writing. See to it, as well, that it can be forgiven at the maximum allowable annual gift rate.

In addition, in the event of death, make sure it’s included in the estate, it’s forgiven and there will be zero call on the note. In effect, that would make it an advance on your inheritance instead of debt. Under no circumstances should they, or any other heirs, have grounds to call the note.

That’s a good question, James. And a nice gift!

Dave

Keeping the side hustle alive

Dear Dave,

I have a full-time job, but I also have a side job providing firewood to help pay off debt. I make $600 to $1,000 a month with this project. My log splitter went down recently when a hydraulic line burst and the machine caught on fire. I’m not sure how much it will cost to get it going again. Should I invest in a new one that will increase my productivity and help me pay off debt faster?

Chris

Dear Chris,

If I’m in your shoes, I’m going to fix the old one. Even if it means duct tape and glue, I’m going to try to find a way to repair it instead of spending a bunch of money or going deeper into debt.

If you can’t do that at a reasonable price out of pocket, I’d be in the market for a decent, used log splitter. And pay cash! I get your line of thinking when it comes to increasing productivity. Splitting wood is real work. But don’t try to justify buying an expensive, new piece of equipment when it’s just not necessary.

If you’re making that much with a side hustle, you can make your money back on a used splitter in a month or two - three at the most. Be smart about it, Chris! 

Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including "The Total Money Makeover." "The Dave Ramsey Show" is heard by more than 14 million listeners each week on 600 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.