Davis Motor Sales banner ad

davesays300 green

KENTUCKY (8/18/13) – This week Dave discusses "Buying a house with 403(b) money" and "What term does he need?"

 

Dear Dave,
Should I take advantage of a 403(b) withdrawal in order to buy a house? - Bryan

Dear Bryan,
I wouldn’t do that because it really doesn’t accomplish anything. The only money you can take out is what you’ve put in, and any growth you’ve experienced has to stay in there. Basically, it’s a retirement plan, and I wouldn’t monkey around with retirement money to buy a home.

My advice is to make sure you’re debt-free and you have three to six months of expenses set aside in an emergency fund. Once you’ve taken care of those issues, you can pile up a bunch of cash in a money market account toward the purchase of a home. You won’t earn a lot of money, but it’s a safe place to park your cash when you’re saving up for a big purchase.

When it comes to saving and investing, I’m a big fan of mutual funds. The problem in this scenario is that if you start sticking money in mutual funds, then the market is down when you’re ready to buy, you could’ve lost some money. That’s not the route I’d want to go if I’m in your shoes, Bryan. I’d forego the opportunity to make money in order to keep it safe for this goal. - —Dave

Dear Dave,
I’m 24 years old, and I have a wife and child. We’ve been following your plan, and I’m about to buy life insurance. Should I get a 20- or 30-year term policy? - Derek

Dear Derek,
I think the big question is how long will you need this life insurance. If you and your wife are planning on having more kids in the next 10 years, I’d suggest a 30-year policy. That could put you in a situation of being 34 years old with a new baby. That’s not old by any means, but your wife will need 20 years’ worth of coverage if this happens, because you’d want the kids grown and out of the house before the insurance term runs out.

But that’s just one of your financial goals at this point. You also want to be debt-free. And you need to ask yourself some other questions. Are you going to have your house paid for 15 years from now? I sure hope you didn’t take out more than a 15-year mortgage. Are your kids going to be grown and gone by then? Are you going to have a big pile of money in the bank by then? In other words, where are you going to be at the end of the term?

If 15 years from now you have $700,000 in your retirement account, your house is paid for, and the kids are out on their own, then, if you die, your wife will be fine, financially speaking. But at that time, if you still have kids in the house and your home isn’t paid off, then you’d probably need a 20-year policy.

That’s how I would look at it. How much longer are you going to need life insurance? - —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.

© 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.

Posted on 2/2/14

In Other News...

Gootee, Poole among Nine Signees for MSU Women's Soccer Program

MURRAY, Ky. (2/27/15) — Standouts from Henderson and Madisonville are among a nine-player signing class for the Murray… Read More

Atmos Energy: Faulty Heating Unit to Blame for Walmart Gas Odor

MADISONVILLE, Ky. (2/27/15) — A rooftop-heating unit was to blame for Wednesday’s temporary evacuation at Walmart… Read More

Most Read This Week

February 21, 2015 6663

Traffic Advisory for Western Kentucky

in Top News For All Sites by KTC
February 25, 2015 5731

New Asian Restaurant Coming to Madisonville

in Local (Hopkins) Top News by Gary Gates, SurfKY News
February 25, 2015 5705

Multi-Agency Investigation Nets Large-Scale Meth…

in Top News For All Sites by Trooper Stu Recke
February 24, 2015 5669

Two Charged in Central City Meth Bust

in Local (Muhlenberg) Top News by Trooper Stu Recke
February 22, 2015 5445

Easter Cuties Pageant in Memory of Shanice Bean

in Top News For All Sites Touching Hopkins by Tammy Holloway, SurfKY News
February 21, 2015 5155

Local Administrators Warn Employees to Watch for…

in Top News For All Sites by Tammy Holloway, SurfKY News

Most Read This Month

February 12, 2015

UPDATE: Name of Pennyrile Fatality Officially…

in Top News For All Sites Touching Hopkins by Doreen Dennis, SurfKY News
January 28, 2015

UPDATED: Several Involved in Two-Vehicle Accident

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News

Stories Trending Today

February 26, 2015 2578

Man Accused of Holding Woman against Will,…

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
February 26, 2015 2537

Woman Charged for Allegedly Selling Hydrocodone

in Local (Hopkins) Top News by Madisonville Police Department/Hopkins County Detention Center
February 26, 2015 1628

Probation and Parole Violators - February 26,…

in Video by Crime Stoppers
February 26, 2015 1626

Hopkins County Health Department Food Scores Thru…

in Hopkins News by Barry Franklin
February 26, 2015 1612

Area College Students Touched by Cancer are…

in Top News For All Sites by Tammy Holloway, SurfKY News
February 26, 2015 1499

Madisonville Police Arrest Reports - Feb. 26, 2015

in Hopkins News by Madisonville Police Department
February 26, 2015 1356

Walmart Evacuated after Customer Alerts 911 of…

in Local (Hopkins) Top News by Doreen Dennis, SurfKY News
February 26, 2015 1305

Super Sunday Hall of Fame Alumni Honored College…

in Top News For All Sites by Joyce Riggs
February 26, 2015 1012

Lions Man, Woman of Year Announced

in Local (Hopkins) Top News by Chris Findley
February 26, 2015 891

Gov. Beshear Announces NASCO Expansion in Bowling…

in General News For All Sites by Office of the Governor