Weekly financial Q&A, with advice on a parent wanting to spend lots of money, diversification and down payments.

Dear Dave,

I need advice on how to handle things where my mom is concerned. She was diagnosed with ALS (Lou Gehrig's disease) a year ago, and now she wants our family to do things together that we can’t afford. Last summer, we took a trip to Norway, and Mom paid half, but it still made things hard on us financially. What can I do?


Dear Emily,

I’m really sorry to hear about your mom. I know that’s tough on everyone in more than just a financial sense. What you’re facing is very sad, and I understand that you want to spend as much time with her as possible. At the same time, though, you can’t bankrupt your family, either.

I think you need to sit down with her and gently explain that while you love her and want to spend as much time with her as possible, you can’t put your family in financial danger to help her with a bucket list. You have to balance your love for your mom and this awful situation with what’s best for your own household.

Make reasonable decisions on what you can and can’t do with her. Can you stretch yourself to do a few special things? Sure, but stretching is one thing; breaking is another. If she’s leaving you insurance money, you could stretch a little bit, then put that back into your funds later. But don’t go into debt to make these things happen. That will just start a cycle of borrowing that you can’t afford and leave you with a pile of payments later on top of your grief.

Your family has enough to worry about right now. Don’t put a bunch of debt on the list, too. That’s going too far.

God bless you, Emily.

The meaning of diversification

Dear Dave,

What exactly do you mean when you talk about diversifying your investments?


Dear Sharon,

When it comes to investing, diversification simply means spreading your money around. This helps reduce risk, because you’re not putting all of your money into one company. This way, you won’t lose everything if that one company goes broke. It’s also why I tell people not to put all of their money into their own company’s stock.

I have lots of mutual funds with one or two mutual fund companies. Within those two companies they’re called fund families. Think of it like a brand of soup. Campbell’s is a brand, but they have all kinds of different soup. I also have money in different banks and in different money market accounts, and I have money in different types of real estate. So, I’ve got several different kinds of investments, but not a million different things running around out there.

If I listed them all out they wouldn’t even take up an entire page. I like to keep things fairly clean and simple, and I encourage you to do the same!

A down payment is not an investment

Dear Dave,

I’m saving up money to buy a house in the next couple of years. How should I invest this money before I actually buy something?


Dear Candace,

The problem is that you’re not really investing; you’re just saving. Investing means you aren’t going to touch the money for five years or more. If you may use the cash to buy something within five years, you’re really just kind of “parking” the money for a little while.

If it were me, I’d put it in a money market account. It’s basically just going to sit there and not earn much, but you won’t lose anything, either. If you’re lucky, you might see one percent interest in the short term, but that’s about all you can expect considering the low-interest rate environment we’re in these days.

For more financial help, go to daveramsey.com. You can hear his radio show weekday afternoons. Find a station or listen on his website. Dave also is on Facebook and Twitter.