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.

Most Read This Week

July 30, 2015 3740

Webster Man Leads Police on Chase through Parts…

by SurfKY News
July 31, 2015 3680

Miss Hopkins County Fair 2015 Chosen

by Tammy Holloway, SurfKY News
July 28, 2015 2794

Hanson, Owensboro, Bowling Green Youths Win at…

by Tammy Holloway, SurfKY News
August 01, 2015 2476

24th Annual Miss Teen Hopkins County Fair Pageant…

by Tammy Holloway, SurfKY News
July 29, 2015 2414

Crime Stoppers Top Most Wanted - July 29, 2015

by SurfKY News

Most Read This Month

July 17, 2015 16615

Muhlenberg Most Wanted - Top 10

by SurfKY News
July 23, 2015 15578

UPDATE: Family Confirms Body of Missing Teen…

by Shawn Freels, SurfKY News

Stories Trending Now

August 02, 2015 1410

Poole Wins Hopkins County Fair Talent Show

by Tammy Holloway, SurfKY News
August 02, 2015 1128

Community Helps ‘Cram the Hummer’ for School…

by Tammy Holloway, SurfKY News
August 02, 2015 1049

Tiniest Division of Hopkins County Fair Pageants…

by Tammy Holloway, SurfKY News
August 02, 2015 777

Spinal Cord Injury Patient's Foundation Sponsors…

by SurfKY News
August 03, 2015 693

Two Injured in Motorcycle Accident

by SurfKY News
August 03, 2015 596

Man Accused of Using Craig's List to Encourage…

by SurfKY News
August 02, 2015 524

Legislator's Log - Week of Aug. 2, 2015

by SurfKY News
August 02, 2015 485

'The Free' Gets Greenville Crowd Groovin'

by Mike Groves, SurfKY News
August 02, 2015 426

Dave Says - Aug. 2, 2015

by SurfKY News
August 02, 2015 398

MCCH Celebrates World Breastfeeding Week

by SurfKY News