March 4, 2014 • Page 2 shop online at www.missourivalleyshopper.com Dave Says Invest Now Or Pay Off Debt? If there’s one thing you can honestly say about Delbert McLain, he’s as persistent as a winter cough. As our chamber of commerce here (he’s it, you see), his fertile brain never ceases its search to turn a sleepy little valley into a cross between Wall Street and Pittsburgh. That’s part of what was going on in his mind this winter’s day as he sat in the rented office the local businesses chip in for each month. On a snowy day like this one, of course, you can never tell when the representative of a foreign auto manufacturer might skid on into town and look around for a good pasture in which to install an assembly plant. And what would happen if Delbert wasn’t there, wearing his tie, in the chamber office when that occurred? The next valley over would experience phenomenal growth and we’d still be left without the “big box” stores. We would be everlastingly condemned to buying our food at the Soup ‘R Market, buying our reading material at the Read Me Now Bookstore, getting a new “do” at Curl Up ‘N Dye beauty salon, and sipping our coffee at the Mule Barn truck stop where the waitresses know everything there is to know about us, whether that’s okay with us or not. But it’s a snowy day, and no one has dropped by wanting to subdivide the old Johnson place or anything, so Delbert threw his tie over his shoulder to get it out of the way and took his flytying vise out of the desk drawer. He was in a streamer mood, and smiled as he tied the colorful tails on the longer hooks, dreaming of the retrieves his friends would make in Miller pond for the bass there. Delbert doesn’t enjoy fishing, just tying the flies. He likes the streamers better than the bass plugs, even if they don’t catch as many fish. They just look classier. So Delbert went on, tying flies for one way of life, and planning how to bring us another way of life, and smiling. Because he had no idea he was doing it. ------------Tired of having to turn down the TV because it’s too loud for others? Free hearing test. Beltone 1-866867-8700. You have the IDEA, we have the SOLUTION: 319 Walnut St., Yankton, SD 605-665-5884 www.missourivalleyshopper.com trucktrailerinc.com TRUCK TRAILER SALES & SERVICE, INC. East Hwy. 50, Yankton, SD BY DAVE RAMSEY Dear Dave, I went to medical school, and now I have $70,000 in debt. I just started a three-year residency making about $50,000 a year, while my wife makes $40,000. The student loans Dave represent our only debt. Do you think we should be paying this off or investing in a Roth IRA? — David Dear David, If I were in your shoes, I’d work on paying down the student loans. That means you may never be in a Roth, but there are other things you can invest in and grow wealth. I realize this may not seem right mathematically, but I don’t always make financial decisions based exclusively on math. Many times I do things based on changing money behaviorsstuff like paying off debts from smallest to largest because it actually works. Personal finance is 80 percent behavior, and only 20 percent head knowledge. So sometimes you have to go with what actually works best overall, in spite of what the technical math shows. In your case, I think it’s going to be very valuable to have no student loans by the time you complete your residency. With three years to go, and living on a $90,000 a year income, you can do it. Then, when you come through the other side as a RAMSEY Interested in this spot? Call 665-5884 to place your ad here. New complete computerized alignment system. Call today for an appointment 605-665-7952 ate ur acc st ystemble! o M s aila av full-fledge doctor, you’ll have the great income and be sitting there debt-free. Not a bad place to be, right? I understand the Roth seems like a pretty good idea right now, but my advice is to stick with becoming debtfree as quickly as possible. Once that’s done, you and your wife will be able to invest, save, and build wealth like crazy! — Dave WANTED Buying all types of SCRAP IRON Farm Machinery • Cars & Trucks References Available • Top Market Prices Paid Home: 402-945-1512 • Cell: 402-533-3640 K&K Iron & Metal DON’T RISK THE FAMILY FARM Dear Dave, My wife started working at a pharmaceutical company that gave her a few thousand dollars’ worth of stock. In the last year that stock has doubled in value. We’ve considered buying more just to see how it does. What do you think about this? — Robert Dear Robert, I understand why you guys would be excited, but you’re still looking at a very risky proposition. Any stock that doubles its value in just one year is highly volatile. It’s very unusual when things like that happen, and the fact is, it could go down in value just a quickly. I think you should be completely debt-free, except for your house, and have an emergency fund of three to six months of expenses in place before you start any 1200 outside investing. You should also make sure that 15 percent of your income is already going toward retirement. I don’t mind you dabbling a little bit as long as all the other stuff is taken care of first. But I’d advise you to never put more than 10 percent of your nest egg into single stocks. If you’ve got $50,000 in a 401(k) right now, limit yourself to $5,000 in this area. That way, if the stock tanks and you lose it all, it’s only a small blip on the radar. You’ll still be financially intact and able to retire with dignity. It would be fantastic if this stock went through the roof and you two made a ton of money. That would be awesome! But make sure you limit the potential for damage by limiting your exposure. 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