Invest in stocks or pay mortgage ?

Dear Dave,

If you have a mortgage that will be paid off in the next two or three years, should you pay extra toward the house or invest that money over and above the 15 percent you recommend putting toward retirement?

— Walt



Dear Walt,

I would pay extra on the house. You know, a magical thing happens when you pay down a house and sell it somewhere down the road. The money comes back. You didn’t lose it.

Honestly, you’re not doing a bad thing by putting it into retirement either. But you don’t know exactly what will happen over the next several years of your life or the life of your investments. You might think you know. You might even have a plan. But the truth is even the best plans don’t always work out the way we want.

And if that happens, it sure would be neat to own your home outright.

— Dave

How to stop small expenses from getting bigger

My husband and I have been living on a budget for a few months, and for some reason there seem to be leaks in our budget. It’s just a few dollars here and there, but added together it makes a huge dent. Can you give us some advice?

Dave Says:
This kind of thing happens a lot in household budgeting, especially to folks who are new to the game. Here are some ideas to help stretch your dollars and plug those leaks.

Use the cash-only method, especially when shopping for groceries. Take only the amount you have budgeted, and don’t use your debit card or a check. Also, use coupons only for items you would buy anyway. In addition, you can stock up on items you use often when there is a big sale. These little things will add up.

Try eating out only on special occasions, drink water as your beverage and don’t be afraid to use coupons in restaurants, either. When it comes to buying clothes, make a habit of checking out the sale rack first. You can shop at thrift and consignment stores, and sell the clothes you don’t wear anymore.

With entertainment, use dollar-off and buy-one-get-one-free coupons whenever you can. See a matinee or a second-run movie, and if you’re going somewhere with a bunch of people, call ahead and ask for a group discount. You’ll be amazed at how much money these tactics will save.

Unlikely government will seize someone's 539 asset

Dear Dave,

    I have a 5-year-old daughter, and I want to start a 529 for her. However, I'm concerned that the government might seize the 529 assets in order to pay off debt and give people treasury bonds instead. Do you think this might happen?

Barry


Dear Barry,

I think there's less than a 1 percent chance they'd seize the actual assets. Really, I don't believe they're any more likely to come take investments away than they are to come take your home. I mean, we're really talking about private property here. If you have $100,000 in a retirement fund, and they say they're going to take that away from you, it's like taking a person's home. I just don't see that happening.

The big question, I think, is this: Are they likely to take away some of the tax benefits – like the 529 plan's ability to grow tax-free? As in, they just come in and say they're making it all taxable to pay the bills they've accumulated up in Washington, D.C., from all their stupid behavior. That kind of thing actually could happen.

-Dave

How to ask for a Raise at work

Dear Dave,

What’s your advice on asking for a raise at work when you have more responsibility than a co-worker but the same title on paper? After being with my company four years, I feel like I should make more money and I have the right to complain about this.

Vanessa



Dear Vanessa,

Sorry, no. You don’t have a right to complain. You agreed on your pay, and you are doing your job the way your character and integrity tell you to do the job. If someone else is a slacker in the same position, that doesn’t mean a whole lot in terms of your personal compensation.

I’ve got several people at my company who hold similar positions and make similar money. Some of them have been here for years, while others are relatively new. I don’t pay people for how long they’ve been in the building, and I don’t want anyone on my team who doesn’t give 100%. Now, that may be a different issue than pay, but at the same time I don’t want someone who gives 50% and I pay them 50%. I want everyone at 100%, but that kind of thing isn’t your problem. It’s the company’s problem, because she works for them and not you.

If you honestly feel like you deserve a raise because of your effort and performance, that’s fine. Sit down with your leader and make a logical and reasonable argument for why you deserve more money. But don’t bring up your co-worker and what he or she makes in the discussion. That’s just not relevant. What is relevant is your worth and the value you bring to the organization.

But a comparative analysis with someone else on staff just isn’t a good idea. I’d stay away from that, Vanessa.

-Dave


via http://www.foxbusiness.com/personal-finance/2014/08/19/real-reasons-deserve-pay-raise

Rental property vs Mutual Funds

Dear Dave,
I’m retired, and my husband plans to work for several more years. We have $130,000 in savings accounts, plus a rental property. The rental property has a $150,000 mortgage, but we have no other debt. Should we sell the rental and reinvest in the stock market?
Barbara




Dave Ramsey

Dear Barbara,
If I were in your shoes, I’d be investing in mutual funds and paying off the rental property as fast as possible. That would be my game plan.

When it comes to mutual funds, you shouldn’t be jumping in and out. The key is to find good ones with long track records of success and stability. Then, leave the money alone for several years and let it do its thing!

—Dave