davesays300 green2KENTUCKY (6/23/13) – This week Dave discusses 'Is combining them smart?' and 'Retirement blend'

Dear Dave,
My son has a $115,000 mortgage at 5.8 percent. He also has a home equity line of credit of $40,000 at 9 percent. Currently, he can get a 30-year loan at 3.5 percent, or a 15-year note at 2.75 percent. His take-home pay is between $70,000 and $80,000 a year, and these are his only debts. Should he combine the mortgages into one loan? - Daniel

Dear Daniel,
First, I only recommend mortgages of 15 years or less. Now we’re looking at a 2.75 percent loan versus a 5.8 percent loan versus a 9 percent loan. I advise people to put home equity loans under Baby Step 2 of my plan, which is pay off all debt except for the house, provided that the loan is less than half of your annual income. Based on the income figures you gave, this situation is kind of on the bubble.

If I were in your son’s shoes, I’d probably combine the two loans and refinance. I’d go for a new $155,000 fixed-rate mortgage at 2.75 percent, with no balloons and no calls. This kid can live a good life and get the mortgage paid off pretty quickly with the kind of money he’s making.

But if it’s me, I’m getting as short a term as possible on a refinance—maybe even a 10-year note instead of 15 years. Just imagine him getting all this knocked out and still having the majority of his life ahead of him. That’s financial peace! - Dave
 
Dear Dave,
My husband and I are debt-free. Recently I learned that I have a blended fund for retirement. Do you think I should switch to self-chosen funds? I have $26,000 invested at the moment. - Marina

Dear Marina,
My advice is to move your money into self-chosen funds. The problem with blended funds is not that they are blended, but that they’ll move it around based on your age and where they perceive you to be in life. You won’t even realize it’s happening. I want you to be a lot more intentional with your money and know what’s happening every step of the way.

With self-chosen funds you can look at them and say, “Those are my funds.” Then, if down the road you decide one isn’t doing as well as you like, you can move the money to a different fund. With blended funds it’s almost like having a babysitter for your money. You’re not the one watching the kids, and to me that’s a big mistake.

There shouldn’t be a lot of fees inside your 401(k) when it comes to trading funds. There’s a good chance there won’t be any fees at all, especially if you stay within the same company. Check into it, Marina, and talk to your human resources people. They can give you all the details. - Dave

* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Times best-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at www.daveramsey.com.
 
 
Disclaimer: The content supplied by columnists and letters to the Editor on this site does not in any way, shape or form, implied or otherwise, necessarily express or suggest endorsement or support of any of such content, statement, or opinions therein. SurfKY News does not necessarily adhere to or endorse content provided by outside non-staff sources.

e-max.it: your social media marketing partner

LIKE SurfKY on Facebook - Click here to LIKE us now.

© Copyright 2015 SurfKY News Group, Inc. All rights reserved. This material may not be published, broadcast, or rewritten without permission. SurfKY News encourages you to share this story on social media.

1 DOW 17,730.11
-27.80 (-0.16%)    
2 S&P 2,076.78
-0.64 (-0.03%)    
3 NASDAQ 5,009.21
-3.91 (-0.08%)    

Most Read This Week

July 02, 2015 13927

Emergency Response Team on Scene of Standoff on…

by Doreen Dennis, SurfKY News
July 02, 2015 5370

Police: Stand Off Suspect in Critical Condition

by Doreen Dennis, SurfKY News
June 29, 2015 4843

UPDATE: Victim of Home Invasion/Homicide Died of…

by SurfKY News
June 29, 2015 3669

Accused Synthetic Marijuana Traffickers Appear in…

by Doreen Dennis, SurfKY News
June 28, 2015 3539

'Curb Service’ at Local Eatery Ends with DUI…

by Doreen Dennis, SurfKY News

Most Read This Month

June 24, 2015 45102

Western Kentucky, Southern Indiana's Largest…

by Doreen Dennis, SurfKY News
July 02, 2015 13927

Emergency Response Team on Scene of Standoff on…

by Doreen Dennis, SurfKY News

Stories Trending Now

July 02, 2015 13927

Emergency Response Team on Scene of Standoff on…

by Doreen Dennis, SurfKY News
July 02, 2015 5370

Police: Stand Off Suspect in Critical Condition

by Doreen Dennis, SurfKY News
July 01, 2015 3170

Police Seeking Public Help in Locating Subject…

by SurfKY News
July 01, 2015 1886

Crime Stoppers Top Most Wanted - July 2, 2015

by Crime Stoppers
July 01, 2015 1669

Two Vehicle Collision Sends One to Hospital

by SurfKY News
July 01, 2015 1629

Tyson Foods to Add 91 Jobs, Invest $8.2M at…

by Kimberly Tarter
July 01, 2015 1280

Goodman Revival Fills 'Praise in the Park' with…

by Tammy Holloway, SurfKY News
July 01, 2015 1185

Juried Art, Photography Exhibit Open at Glema…

by Tammy Holloway, SurfKY News
July 01, 2015 1163

Madisonville Police Arrest Reports Released -…

by SurfKY News
July 02, 2015 1154

North Middle School Welcomes New Principal

by Julie Wischer