Share “Your Money: Don't forget your budget...”

Your Money: Don't forget your budget during Christmas

Dave Ramsey: Don't push debt reduction too much during the holidays, especially when you're just starting the program.
BY DAVE RAMSEY, For The Oklahoman Published: December 23, 2013
Advertisement

Remember, unless you've waited until you're in your 60s, the vast majority of the money in the account will be growth. Ten percent or less will be the money you actually put into the account. This tax-free growth is what makes the Roth TSP an excellent choice.

In other words, if you've got $1 million in your current investment, and $900,000 is growth, you'll get taxed on that portion. That would amount to around $300,000. If your money is in a Roth, there are no taxes. You just saved $300,000 out of every $1 million. Not a bad deal, is it?

DEAR DAVE: What do you think about using an online bank for my emergency fund?

— Raphael

DEAR RAPHAEL: It's not a bad idea at all, as long as you can easily check out the institution's reputation and stability. There are lots of financial scams online, so you want to do some research and make sure they're a reputable and trustworthy organization.

Due diligence is the key, Raphael. There are reliable household names that are online banks, but you can't just assume the group you're dealing with online is made up of honest, stand-up folks any more than you can with a traditional brick-and-mortar bank. Make sure you take your time and know exactly what you're getting into before going into business with them.

Remember, it's not as simple with an online bank as just walking in the door to get your money back if something goes wrong.

Email questions for Dave Ramsey to davesays@daveramsey.com.