February 2008

  • A good rule of thumb on selling items (except the home) to pay down debt is this: If you can’t be debt-free on it in 18 to 20 months, sell it.
  • It’s not recommended to sell your home unless you have payments above 45% of your monthly take-home pay.
  • Generally speaking, if your second mortgage is more than 50% of your gross annual income, you should not put it in the Debt Snowball. Pay it off with your first mortgage after you’re able to save for retirement.
  • You are secure and will leave a nice inheritance when you can live off 8% of your nest egg per year. If you earn 12% interest on your money and only pull out 8%, you grow your nest egg each year by that extra 4% to keep up with inflation. To live on $40,000 you’d only need a nest egg of $500,000. (more…)

I’ve seen the billboards, tuned in to the radio show and have slowly started to give Dave Ramsey a second chance. My friends that are on the ‘Dave Ramsey program’ all love it, and swear by it. So I borrowed a book from a friend, and just finished reading it cover to cover (a feat in itself for someone like me). The book was what I expected, nothing too terriblyTotal Money Makeover new or revolutionary (one of the reasons I decided to borrow it instead of purchase it). His mantra, ‘if you will live like no one else, later you can live like no one else’ is enumerated throughout the pages. Essentially, you need to 1) live on less than you make and 2) only buy things when you can afford them, which means paying cash for the entire amount. (more…)

Today Suze Orman appeared on the Oprah Winfrey Show. The episode addressed the relationship women typically have 51qnndcn8kl_aa240_.jpgwith money. Essentially, that they don’t know the real expenses of their household, they don’t have a firm grip on the balances of their credit cards and other debts, they assume their husband has been taking care of everything. This situation also describes the one my mother finds herself in and I believe many of her generation (the baby boomers). As Oprah is quite popular for her generous giving of the studio audience, today and until tomorrow at 7pm she’s giving at-home viewers a free copy of Suze Orman’s latest book Women & Money!

In October, I wrote a previous post on how I planned to allocate my Roth IRA investments. Well today (1/25/08), after much strenuous research and the market dropping to records lows, I decided now was the time to act. Many of the investments I had been looking at dropped significantly on Wednesday (1/23/08). I felt pressure to buy but I had yet decided exactly on which funds I wanted to buy. Certainly, I didn’t want to act out of haste without properly reviewing the expense ratios and such of each of the investments I was considering. (more…)