Pay debts or save for retirement?

  • Weighing options: paying off debt or saving for retirement

    Weighing options: paying off debt or saving for retirement


Dear Dave,

Do you think I should lower the amount I’m contributing to my retirement fund so I can pay off my house and my truck?

— Jamie

Dear Jamie,

If you’re following my plan, the first thing you should do is set aside a beginner emergency fund of $1,000. That’s Baby Step 1. Next comes Baby Step 2, which means paying off all your debt except for your house. This would include your car. During this time, you should temporarily stop any kind of investing and retirement contributions.

Once your mortgage is the only debt you have left, it’s on to Baby Step 3. This means you start saving money and growing your beginner emergency fund into a fully-funded emergency fund of three to six months of expenses. When that’s done, you can attack Baby Step 4 — investing 15 per cent of your income for retirement. The rest of the plan goes like this. Baby Step 5 is putting money into your children’s college funds, if you have children, while Baby Step 6 is putting everything you can scrape together towards paying off the house early. After that comes the real fun. Baby Step 7 is the point where you build wealth and give like crazy. It may take a little time in some cases, but following these steps will lead you to financial peace!

— Dave

Dear Dave,

I just accepted my first job in sales. In your mind, what is the key to becoming an excellent salesperson?

— Bobbie

Dear Bobbie,

The key to becoming a great salesperson can be summed up in one simple word — serving. I’m not talking about being subservient. I’m talking about always giving 110 per cent towards ensuring customers and potential customers are served well. It’s all about being proactive. Serving means you believe in what you represent, and you’re excited about what you have to offer. It means you’re determined to give people a great experience. If an issue happens to arise, you’ll take care of it quickly and completely. You’ll do this in a way that will make them forget it ever happened.

Really, serving is an attitude. You can pressure people if you want, but that’s going to lead to a dull and frustrating life of one-shot deals. But if you serve people well, you’ll have clients for life and they’ll send their friends and associates your way. Make helping people your first order of business, Bobbie. If you do that, you’ll never have to worry about money!

— Dave

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week. Follow him on daveramsey.com and on Twitter at @DaveRamsey

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Published Oct 27, 2018 at 8:00 am (Updated Oct 27, 2018 at 12:35 am)

Pay debts or save for retirement?

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