Stop playing with silver and gold and pay off that debt!
I make about $240,000 annually, and I will be maxing out my 401(k) contributions this year. I have $60,000 in student loan debt I’m trying to pay off, a small amount left on my home mortgage, plus I’ve been investing in a lot of gold and silver. Those investments are worth about $30,000 right now. In addition to this, I’ve got $10,000 in cash just sitting in a savings account for emergencies. Should I stop the gold and silver investing, and focus on paying off the loans, or keep splitting my money between them?
I’d stop investing in gold and silver completely. I don’t put money in precious metals at all, because they have a lousy long-term track record.
My advice would be to cash out every bit of your gold and silver, and put the money toward paying off your student loans. That would instantly cut your student loan debt in half. Then, with your salary, you should be able to pay off the rest in just a few months.
The key will be to start living on a very strict budget. Don’t spend on anything that’s not absolutely necessary. I also want you to temporarily stop contributing to your 401(k). Do this just until you get the student loan debt wiped out, then pick it up again like before. If you want to put even more toward retirement, you could check with a quality investment professional — one with the heart of a teacher — to see if you’re eligible for a back-door Roth IRA. When it’s all said and done, Adam, I want you to have 15 percent of your yearly income going toward retirement.
You already know the value of saving and investing. With your income, once you knock out your debt and begin investing again, you have the very real potential to become a millionaire in just a few years!
* Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 14 million listeners each week on 585 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey.S