I love it when readers ask me questions. And believe me when I tell you the questions pour in and on every topic imaginable—even how to cut the cost of online dating. Today, I pulled the following three letters from the EC mailbag:
Dear Mary: We are better off than most. We have no credit-card debt, we have several hundred dollars in cash stashed away in a safe in our house and we have about $5,000 in savings. Our 401(k) accounts and Roth IRAs have a total current value of about $50,000. My husband is 41 and I’m 35. We have two kids and college 529 college savings plans for them. Our mortgage is our biggest payment. Should we pay down our mortgage with extra income or put the extra money into our retirement accounts? Peggy
Dear Peggy: Before you’re ready to do either—pay down debt or invest—you need at least enough money in your emergency fund that to keep all the bills paid and food on the table for at least six months without any income. That money should be in a safe place where you could get your hands on it in say 36 to 72 hours, which could be in your home safe, but I’d rather it be in a savings account in a bank or credit union. While your $5,000 in savings is a good start, it’s not nearly enough. I’m thinking more like $30,000. Am I right?
Once your emergency fund is safe and secure, it’s a tossup on whether you should aggressively invest in paying off your mortgage or invest in the market to build wealth for retirement. I’m sure we could find plenty of experts to argue both options.
I would advise you concentrate heavily on paying off your mortgage debt. There is no better investment than a repaid debt. Not only will you get a guaranteed rate of return, eventually you will pay it off completely. That house will be all yours. You can live in it mortgage-free, while that asset grow in value. As investments go, that’s hard to beat.
Dear Mary: I work hard every day and don’t have the energy to get out in the evenings. I spend my free time with longtime friends, so I don’t meet single men. I know several people who have found partners online. I’m determined to find a man for myself before the end of the year. Online dating services may be the way, but they can get pricey. Are there coupons online for special deals? Belinda
Dear Belinda: There are. Google “Online Dating Coupons” and you’ll turn up a love boat load of online coupon codes for any number of dating sites. Please do not take this as any kind of an endorsement from me. Be careful out there, hear?