Dear Dave,

My mother-in-law is 60. She works hard and has no debt, but she also has no savings or retirement accounts. However, she owns a couple of paid-for rental properties that are worth about $350,000 each, and her home is worth $700,000. What can I do to help her plan for the future? — Paul

Dear Paul,

The best plan would be to first see if she’s already got a plan. I understand you’re worried about her not having any savings or retirement. That makes you a good son-in-law. But it sounds to me like she’s got the makings of a pretty good retirement situation lined up, even if she didn’t go the traditional route to get there. You just told me she’s sitting on nearly $1.5 million in paid-for real estate. Dude, she’s a millionaire!

If the time comes where she decides she doesn’t like landlording anymore or just wants to retire, she can always sell the rental properties, invest that big pile of cash in mutual funds, and live off the income. I’ve got a feeling this lady isn’t going to be starving or depending on Social Insecurity.

If you’re concerned about things, just sit down with her and let her know. Ask her if she needs any help with her money situation and plans for retirement. If she doesn’t want to talk about it right now, that’s fine, but making the offer shows you care. And, having a good, strong game plan means fewer worries!

— Dave

GET DIALED IN

Dear Dave,

My wife and I have two kids and one on the way. We’re debt-free except for our home, and we have our emergency fund in place. We’ve also been saving for retirement, with me putting 15% into a 401(k) and her putting 10 percent into her retirement account. On top of all this, we’re putting a little money toward college funds for the kids. We talked the other night, and after that we started thinking about pulling back from retirement saving and getting the house paid off. What do you think about that? — Callen

Dear Callen,

I teach people to start investing 15% of their household income for retirement after they’ve completed Baby Step 3, which is saving three to six months of expenses for an emergency fund. Baby Step 4 would be both of you putting 15% of your income into retirement, and you’re not quite doing that yet. Saving for college comes next in Baby Step 5.

I don’t teach people to put less than 15% of their income into retirement in order to pay off the house a little earlier. It’s tempting when you’ve got the debt-free bug, but it’s not the shortest distance between where you are right now and wealth. The average person who follows my plan—the Baby Steps—can pay off their home in about seven years.

You’ve got offense and defense to think about, Callen. Defense is getting rid of debt, and the offense is building wealth. You don’t want to let your guard down on offense in order to just play defense and get the house paid off. What you’re talking about is a normal reaction for lots of folks in your position, but it’s not what I would recommend right now.

I love your fire, but follow the Baby Steps as they’re laid out. My goal isn’t just helping people get out of debt. It’s to teach people how to become wealthy as a result of being out of debt and encouraging them be outrageously generous along the way! — Dave

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Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Dave Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.

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