So, here’s the deal. I’ve been through some tough times in the past, but now I’m 45 and trying to get my financial act together. I’ve got 38,000 (approximately 38,000 usd) in a pension, 9,000 in an old retirement fund, and 6,500 in a Roth IRA. I make around 125 a year (about 125,000 usd) and have some student loan debt, a mortgage, and a goal to save for a trip to Europe.
I’ve been following Dave Ramsey’s advice and paid off a chunk of credit card debt already. I’m pretty good at saving too – I think I can stash away about 20k by the end of the year. Ramsey says to pay off my student loans, build a three month emergency fund, and then put 15% of my income into retirement, while using the rest to pay off the mortgage. But, I’ve been crunching some numbers and wondering if it might be better to invest more and make just a couple of extra mortgage payments a year instead.
Oh, and I really want to visit Europe while I still can. I’ve never traveled outside the US, so it’s a big dream of mine.
What do you think I should do, Money Minder?
Retired Traveler
Response from THE MONEY MINDER:
Hello There,
Hello,
I must say, your journey is truly inspiring. From overcoming such adversity to finally taking control of your finances, you have come a long way. I am truly impressed by your determination and resilience.
Given your current financial situation, it seems like you have already made some great progress in paying off your debts and setting up your emergency fund. Based on the details you shared, it appears that you are in a good position to continue on the path to financial stability.
Considering your income, savings potential, and goals, here is a practical approach that you might want to consider:
Firstly, continue to focus on paying off your high-interest debt, starting with your student loans. Once you have paid off the student loans, you can then focus on building a fully funded emergency fund that covers three to six months of expenses.
Next, consider contributing 15% of your income towards retirement savings. Since you have a pension and other retirement accounts, you can diversify your investments to maximize your returns. It might be worth consulting a financial advisor to help you create a solid investment strategy that aligns with your goals.
When it comes to your mortgage, making additional payments can help you save on interest in the long run. However, investing your money might also provide better returns. It could be a good idea to find a balance between extra mortgage payments and investment opportunities based on your financial goals and risk tolerance.
Lastly, saving for a trip to Europe is a great idea. Traveling can be a rewarding experience, and it’s essential to enjoy life while also planning for the future. Consider setting aside a portion of your savings each month towards this goal, so you can achieve your dream of traveling abroad.
In conclusion, continue to be mindful of your spending habits, stay focused on your financial goals, and make informed decisions that align with your long-term objectives. You have shown incredible strength and determination, and I have no doubt that you will continue to thrive on your financial journey.
Best of luck,
THE MONEY MINDER
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