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.

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.

Posted on 2/2/14
3/13 - 16
3/13 - 16

Most Read This Week

April 23, 2015 7748

Man Charged with Sodomy, Incest/Victim under 12

by SurfKY News
April 20, 2015 4995

Nortonville Woman Charged with Meth Possession at…

by Madisonville Police Department
April 24, 2015 4334

UPDATE: Police Can't Substantiate Injured Man…

by Doreen Dennis, SurfKY News
April 22, 2015 4053

Crime Stoppers Fugitive of the Week – April 22,…

by Hopkinsville – Christian County Crime Stoppers
April 22, 2015 3977

Madisonville Man Accused of Domestic Violence/Rape

by SurfKY News

Most Read This Month

April 17, 2015 12761

An Open Letter from an Addict

by Olivia Kirks
April 02, 2015 8883

UPDATE: Madisonville Man Injured in Head-on…

by Doreen Dennis, SurfKY News

Stories Trending Now

April 26, 2015 1012

New Drug Helps Farmer with Parkinson's Return to…

by Laura Dawahare
April 26, 2015 636

White Plains Civil War Festival Provides Learning…

by Tammy Holloway, SurfKY News
April 26, 2015 540

Spring Lawn, Garden Fair Participants Learn from…

by Tammy Holloway, SurfKY News
April 26, 2015 527

College of Education Alum's Studies, Experience…

by Amanda Nelson
April 26, 2015 504

Dave Says - April 26, 2015

by Dave Ramsey
April 26, 2015 498

Legislator's Log - Week of April 26, 2015

by Brent Yonts
April 26, 2015 486

Mother's Day Buffet Planned at State Parks May 10

by Gil Lawson
April 26, 2015 459

Outdoor Truths - April 26, 2015

by Gary Miller
April 27, 2015 458

Mustangs Lose to Ohio County via Shutout

by Steve LeMaster
April 26, 2015 354

Dawson Springs Mule, Draft Horse Days Come to a…

by Amber Averitt, SurfKY News