Dear Dave,

My husband and I are both 50, and we make about $50,000 a year. We have a little bit of debt, and recently my mother-in-law moved in with us due to health issues. We’ve always gotten by, but now we’re struggling with the additional expense of having her with us. We love her, but we’re unsure what to do financially. Do you have any suggestions?

JEN

Dear Jen,

Anytime things get tight and something like that happens, it’s your wake-up call. It’s the phone ringing, so I’m going to tell you to pick up the phone. It’s telling you that you’ve been kind of sloppy and disorganised with your finances in the past, but you’ve made just enough money to get away with it.

Her moving in tightened things up, and that’s understandable to a point. But it has shone a spotlight on the fact that you’re going to have to start doing a written plan and behaving. Chances are you’re going to have to cut back on some stuff, because you’ve chosen to take care of her. This is an honourable choice and a wonderful thing you’re doing, by the way.

With this added responsibility you’ve taken on — and many Americans are facing the same thing — you’re going to find yourselves on one end of the Sandwich Generation. They’re sandwiched between taking care of their parents and taking care of their grown kids. And the way you handle it is with a written budget.

The good news is that with a detailed plan, you can analyse whether you need extra income, if you need to cut some expenses or both. You’ve got to create a little margin to have a clear picture of your future. If you just wander along without a plan, you’re going to make a mess out of this, and it’s going to get bad fast.

—DAVE

Dear Dave,

What percentage of your total net worth should your personal residence be during retirement?

SUE

Dear Sue,

Honestly, I don’t have a set percentage for this kind of thing. The larger your net worth, the smaller the percentage would be. Let’s say you’re worth $5 million. In this scenario, you wouldn’t want to have 50 per cent in your home. But if you’re worth $150,000, you’re probably going to have more than 50 per cent in your home.

So, the smaller your net worth is, the larger the percentage your home will likely be. That’s very reasonable, and it’s one way you can look at. If you’re in the million-dollar range of net worth, I don’t think I’d want to have half or more of it in my house.

But I think you see how I’m looking at that. You want to try and have as small a portion as possible, but you also have to have a home that’s suitable for your needs.

—DAVE

* Dave Ramsey is America’s trusted voice on money and business. He has authored five New York Times best-selling books. The Dave Ramsey Show is heard by more than 8.5 million listeners each week on more than 550 radio stations. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.