dave ramsey blackwhite 300KENTUCKY (10/6/13) - This week Dave discusses 'This is your college fund' - and 'Should we stop paying commission?' - and 'Emergency funding'

Dear Dave,
Our daughter is 11 years old, and we save $50 a month for her. Right now, we’ve accumulated $4,200 for college, a car or just savings in general. Should we be investing this money, instead of putting it in a savings account? - Jill

Dear Jill,
If I’m in your shoes, I’d choose college as the focal point over the other things you’ve mentioned. My advice would be to move that money into a 529 Plan with mutual funds inside. That way, it will grow tax-free from this point forward. Then, if you continue to set $50 a month aside for her for seven more years—and the stock market averages 11 to 12 percent—you’d have about $16,000 sitting there when she turned 18. That wouldn’t fully pay for college, but it’d be a great start. Plus, she can apply for scholarships and grants and work and save to help make it happen.

As far as a car is concerned, I’d set up a separate savings account and agree to match whatever she saves. That way, if she can put aside $3,000 to $4,000, with the match she’ll have a pretty nice car. But in my mind, college is the most important thing here. If you guys can afford these contributions, and she wants to go to college and will hold up her end of the deal, you can work together as a family and make the idea of a college education a reality! — Dave

Dear Dave,
Should families who are struggling to pay off debt still give their kids commissions for doing chores? - Steve

Dear Steve,
Yes, but it doesn’t have to be a lot of money. Kids seldom get paid an amount that is equal to what the chore is worth. To be perfectly honest, the chores most kids do—especially the little ones—aren’t worth that much. I wouldn’t pay a kid five dollars a day, or even per week, to feed the dog. I mean, it takes less than 30 seconds to scoop the food into the bowl!

When it comes to paying kids commissions for chores, the biggest thing we’re trying to do is find teachable moments. We want the kids to learn that money is tied to work. Then, when they have some money, we want to teach them about the three uses for money—spending, saving and giving.

Teaching them wise ways to do those three things while you’re teaching them to work is the key. And you can do that for a small amount of money.— Dave

Dear Dave,
How long should it take someone to fully fund their emergency fund? - Chris

Dear Chris,
On average, building an emergency fund takes six months to a year. It takes about 18 to 24 months for most people to pay off all of their debt, except for the house. That’s if they’re gazelle intense, and have no life other than getting control of their finances.

Baby Step 1 is saving $1,000, and not paying extra on your debts until you have that money in the bank. Once you’ve got a $1,000 starter emergency fund, then your list all of your debts except the house from smallest to largest and attack them with a vengeance. All you do is work and pay off debt until you clean up the mess. Once that’s done, you move on to the next Baby Step, which is adding to your emergency fund until you have three to six months of expenses set aside. Most people can accomplish that in six months to a year.

There are always various factors involved because everyone’s situation is different. But in most cases, if you approach my plan with the kind of intensity I talk about, you can become debt-free except for your house and have a fully-loaded emergency fund is place in just two or three years!— 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.

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 7755

Man Charged with Sodomy, Incest/Victim under 12

by SurfKY News
April 20, 2015 5000

Nortonville Woman Charged with Meth Possession at…

by Madisonville Police Department
April 24, 2015 4342

UPDATE: Police Can't Substantiate Injured Man…

by Doreen Dennis, SurfKY News
April 22, 2015 4055

Crime Stoppers Fugitive of the Week – April 22,…

by Hopkinsville – Christian County Crime Stoppers
April 22, 2015 3979

Madisonville Man Accused of Domestic Violence/Rape

by SurfKY News

Most Read This Month

April 17, 2015 12830

An Open Letter from an Addict

by Olivia Kirks
April 02, 2015 8884

UPDATE: Madisonville Man Injured in Head-on…

by Doreen Dennis, SurfKY News

Stories Trending Now

April 26, 2015 1045

New Drug Helps Farmer with Parkinson's Return to…

by Laura Dawahare
April 26, 2015 647

White Plains Civil War Festival Provides Learning…

by Tammy Holloway, SurfKY News
April 26, 2015 547

Spring Lawn, Garden Fair Participants Learn from…

by Tammy Holloway, SurfKY News
April 26, 2015 547

College of Education Alum's Studies, Experience…

by Amanda Nelson
April 26, 2015 520

Dave Says - April 26, 2015

by Dave Ramsey
April 26, 2015 514

Legislator's Log - Week of April 26, 2015

by Brent Yonts
April 26, 2015 506

Mother's Day Buffet Planned at State Parks May 10

by Gil Lawson
April 27, 2015 484

Mustangs Lose to Ohio County via Shutout

by Steve LeMaster
April 26, 2015 475

Outdoor Truths - April 26, 2015

by Gary Miller
April 26, 2015 363

Dawson Springs Mule, Draft Horse Days Come to a…

by Amber Averitt, SurfKY News