Dear Dave,
I’m 21 and make $45,000 a year. I’ve heard about your 100 percent down plan to buy a house. I’d like to know more about this and where I should put the money I’d be saving.
J.P.
Dear J.P.,
I like the way you think! But there’s really no big “plan” to what I’m talking about. It’s not rocket science. It’s just a matter of saving like crazy and living on rice and beans for a few years so that you can save up the cash to buy your home outright.
If you’re looking at buying a place in less than five years, I’d put it in a money market account. In this case, you’re not going to be saving long enough for the interest to be a good friend. Your best buddy is going to be a low-key lifestyle.
If your timeframe is more like 15 or 20 years, then you should look into a mutual fund. Most people don’t stretch the idea out over that period of time, but if you do you’ll get some great help from a friend named compound interest.
I don’t beat people up for taking out a 15-year, fixed rate mortgage. But I’m always for people living like no one else so that later they can live like no one else. Go for it, J.P.!
- Dave
Dear Dave,
At what age do you stop paying your children’s life insurance? My son is 24, and he’ll be getting out of the Navy next year and starting college. My daughter is currently in college, and we’re paying for her education in addition to her life insurance.
Sandra
Dear Sandra,
I think you need to scrap the whole concept. You don’t buy life insurance for kids. A small rider – just enough to cover burial costs – on your policy will do the job in the event that something tragic happens. And make sure you’re using a good, term life policy.
When your kids are out on their own, that’s when you turn everything over to them and let them live their own lives. This means paying the bills and any insurance they need!
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