Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Henderson | Lakes | McCracken | Webster

Dave Says – Dec. 15, 2013

dave says2 300KENTUCKY (12/15/13) – This week Dave discusses 'intense focus' and 'savings and security.'

Dear Dave,
What would you recommend for 401(k) contributions while getting out of debt? — Chaz

Dear Chaz,
I recommend putting a temporary stop to investing while you’re getting out of debt. Lots of people are shocked by this advice, because they’re afraid of missing out on the wonders of compound interest or their employer’s match. But the key word here is “temporary.”

Millions of people have followed and been successful with the program found in The Total Money Makeover. The first step, Baby Step 1, is to save $1,000 as a starter emergency fund. Baby Step 2 is pay off all of your debts, except for your house, from smallest to largest with the debt snowball plan. During this time you’re attacking your debt with incredible intensity and putting every penny you can scrape together toward knocking out debt.

The average person working my plan can pay off all their debt, excluding their home, in 18 to 24 months. Some folks can do it faster, and for some it takes a little bit longer. But during this time I want your financial focus to be squarely on getting out of debt. Once that’s done, you’ll find that you have a lot more control over your biggest wealth-building tool: your income.

Many times in life we try to accomplish too many things at once. One problem with this is often it diminishes our ability to focus. When you spend all your time nickel-and-diming everything, the result is that nothing gets done very well. You need to really move the needle and see results because personal finance is 80 percent behavior and only 20 percent head knowledge. It’s not really a math issue because if you’d been doing the math all along, you wouldn’t have a bunch of debt.

That’s why, for a short period of time, I want you to concentrate with laser intensity on knocking out debt. Once that’s out of the way, you can pour even more money into saving, investing and achieving financial peace! — Dave
 
Dear Dave,
My wife and I make about $100,000 a year. We have $63,000 in the bank, and we owe $47,000 on our home. The house is worth about $250,000, and it’s our only debt. We’d like to go ahead and pay off the house, but we’re worried about depleting our savings to that extent. What would you do? — Matt

Dear Matt,
If I were in your situation, I’d cut a check and pay off the house. Keep in mind that by doing this we’re not saying you’ll keep your savings at that lower point. Once that mortgage payment is off your backs, you’ll be able to save more and save faster than ever!

That’s my advice. Pay off the house and become completely debt-free today. You’ll still have $16,000 dollars in the bank and a six-figure income. It won’t take you long to rebuild your savings all the way back to what you had before, if that’s what you both want. You could do it in just a few months.

I’m looking at this as an opportunity to achieve the kind of financial independence everyone wants but few actually have. Go for it, Matt!
—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 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.

© Copyright 2014 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 by using one of the social media links below.

button coupons
button classifieds

In Other News...

Special Events Committee Meetings Cancelled

OWENSBORO, Ky. (11/25/14) — Both the December, 2014 and January, 2015 meetings of the Special Events Committee have… Read More

Owensboro Convention Center Partners with Kentucky Proud to Promote Locally Sourced Foods

OWENSBORO, Ky. (11/25/14) — In cooperation with the Kentucky Department of Agriculture, Global Spectrum, operators of… Read More

Most Read This Week

November 21, 2014 6615

Man Accused of Assaulting Coach During Basketball…

in Local (Muhlenberg) Top News by Rita Dukes Smith, SurfKY News Director
November 22, 2014 4309

One Injured in Two Vehicle Collision in Greenville

in Local (Muhlenberg) Top News by Miria Thomas
November 21, 2014 4033

Crashing Dump Trucks in Work Zone Cause Pennyrile…

in Top News For All Sites Touching Hopkins by Trooper Stu Recke
November 19, 2014 3984

Is Bankruptcy Your Best Option?

in General News For All Sites by SurfKY News
November 19, 2014 3776

Two Killed When Vehicle Becomes Airborne, Strikes…

in Local (Owensboro) Top News by Daviess County Sheriff's Office
November 21, 2014 3301

Muhlenberg District Court Fines Handed Down

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
November 19, 2014 3222

Three Injured in Two-Vehicle Collision on South…

in Local (Hopkins) Top News by Gwen Smith
November 21, 2014 3081

Madisonville Police Arrest Reports - Nov. 21, 2014

in Hopkins News by Madisonville Police Department
November 21, 2014 2681

Swimming and Diving Closes Fall Season at Ohio…

in General Sports For All Sites by UK Athletics
November 20, 2014 2530

Local Church Prepares for 'Return to Bethlehem'

in Video by Gary Gates, SurfKY News

Stories Trending Today

November 24, 2014 2406

Two Charged for Possession of Meth After…

in Local (Muhlenberg) Top News by MCSO/PIO Alex Piper
November 24, 2014 2229

Madisonville Police Charge Woman with Terroristic…

in Local (Hopkins) Top News by Madisonville Police Department
November 25, 2014 1891

Madisonville Man Charged for Selling Cocaine

in Local (Hopkins) Top News by Madisonville Police Department
November 24, 2014 1658

Hopkins County Sheriff's Reports Released

in Hopkins News by Sheila Hopper
November 25, 2014 1603

Call for Help Results in Arrest for Possession of…

in Local (Hopkins) Top News by Madisonville Police Department
November 24, 2014 1587

Madisonville Police Arrest Reports - Nov. 24, 2014

in Hopkins News by Madisonville Police Department
November 24, 2014 1393

Mustang Bass Team Chosen for Next Season

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
November 24, 2014 1370

Salon G in Business of Making Women Beautiful for…

in Local (Muhlenberg) Top News by Charles W. Riley II, SurfKY News
November 24, 2014 1234

Dawson Springs Police Reports Released

in Hopkins News by Melissa Heflin
November 24, 2014 1130

Santa and Mrs. Claus Coming to Thistle Cottage

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News

SurfKY News Group, Inc.
Corporate Office & Studio
1125 Nebo Rd.  •  Madisonville, KY 42431
270.452.2727 (phone)
  •  270.452.2249 (fax)


Contact a member of our staff: www.surfky.com/contact
Copyright © 2014 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social fbsocial twsocial yt
social gpsocial flrsocial rss