DAVE SAYS

Time to pay it off
Dave Ramsey

Dear Dave,

I’m retired, and I have $400,000 in an IRA that’s earning 10 to 12 percent. The only debt I have is $20,000 on a home equity line of credit, and my home is worth $500,000. Should I pay off the home equity loan using funds from my IRA?

Janet Dear Janet,

Wow, you have a half-million dollar home on the line for only $20,000? There’s no way I’m going to have a $500,000 asset pledged for that kind of money. No way! If I were in your shoes, I’d pay off the loan today.

You’re obviously a smart lady. You’ve got an IRA that’s busting it, and this little loan is the only thing standing between you and complete financial freedom. But that loan represents risk you don’t need in your life. I know you probably haven’t been lying awake at night worrying over it, but you’re going to have a wonderfully weird experience when you knock this thing out. A wave of peace is going to wash over you, and you’re going to feel lighter and more liberated than ever before.

Your retirement isn’t at risk, and it won’t cost you much money. Pay it off today, Janet, and discover the true meaning of financial peace!

—Dave

Exchange traded funds as investments?

Dear Dave,

How do you feel about an exchange-traded fund (ETF) as an investment device?

Charles Dear Charles,

The main reason to do an ETF is it allows you to trade your stocks or mutual funds easily and often. I can’t recommend them because I don’t advise buying and selling all the time where your investments are concerned.

In most cases, getting into this kind of thing implies that you’re trying to time the market. It means you’re trying to buy at the low point and ride them up to the high point. Based on my understanding of the market, I’m a buy-and-hold kind of guy. So, I have no need for ETFs whatsoever.

—Dave

Dave Ramsey is a trusted voice on money and business. He’s a best-selling author and his radio show is on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.


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2013-06-06 digital edition



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