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.

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

March 25, 2015 5153

Fazoli's, Roses Coming to Madisonville

by Amber Averitt, SurfKY News
March 27, 2015 5036

Three Arrested during Execution of Search…

by Madisonville Police Department/Hopkins County Detention Center
March 24, 2015 4984

One Dies, Another Injured in Mortons Gap Traffic…

by Deputy Heath Owens
March 25, 2015 4915

Grand Jury Finds No Criminal Wrongdoing in Bean…

by Doreen Dennis, SurfKY News
March 24, 2015 4121

UPDATE: One Injured in Hopkinsville Road Accident

by Doreen Dennis, SurfKY News
March 25, 2015 3852

Madisonville Man's Living Room Leap Lands Him in…

by Madisonville Police Department / Hopkins County Detention Center

Most Read This Month

March 09, 2015 13105

Multi-Agency Drug Bust Results in $1 Million Meth…

by KSP DESI
March 02, 2015 11451

Madisonville Teen Faces Numerous Drug Charges

by Madisonville Police Department/Hopkins County Detention Center

Stories Trending Today

March 27, 2015 5036

Three Arrested during Execution of Search…

by Madisonville Police Department/Hopkins County Detention Center
March 27, 2015 2095

MPD Searching for Man Accused of Nearly Running…

by Madisonville Police Department
March 27, 2015 1719

Family Loses Possessions, Dog in Sugg Street Fire

by Doreen Dennis, SurfKY News
March 27, 2015 1267

Hopkins Grand Jury Indictments Handed Down

by Karen McKnight
March 27, 2015 1154

Rehabber Explains Her Mission; Efforts Filmed by…

by Ron Sanders
March 27, 2015 1036

Hopkins County Health Department Food Scores Thru…

by Barry Franklin
March 27, 2015 910

Madisonville Police Arrest Reports - March 27,…

by Madisonville Police Department
March 27, 2015 818

Sheriff Explains Numerous Duties of Office,…

by Ron Sanders
March 27, 2015 815

Work Continues on Madisonville's Downtown Plaza

by Rita Dukes Smith, SurfKY News Director
March 27, 2015 788

Utility Tax Petition Signatures Put Choice before…

by Charles W. Riley II, SurfKY News