Dear Dave,
My wife received $100 from her parents for her birthday. When I asked what she planned to do with it, she said she was going to add it to her spending money. I think she should put it toward us paying off debt, but I bit my tongue and didn’t say anything. We’re in pretty good shape financially, so should I mention it or just let it go?
Charles
Dear Charles,
I’m sure you’re a smart man, so you’ll understand when I tell you — for the sake of your marriage and mental health — to let this one go. Seriously, is $100 going to move the needle that much? It’s her birthday, and it was a gift designed to let her do something nice for herself. There’s absolutely nothing wrong with her spending a little bit on herself on her special day.
If she had asked me about this, I would have told her it was fine. If she had asked me about putting it toward debt, I would have said that’s fine, too. It’s not a big deal for someone to have a little fun once in a while. But it’s a bad plan for you to try to get at her gift. Just let it go, and do your part to make sure she knows that you love her and that she has a great birthday.
Dave
Should retirees move investments to a CD?
Dear Dave,
My wife and I are in our early 70s, and we’re retired. We have about $136,000 in corporate bonds and $200,000 in mutual funds. Considering our age, should we move the investments into a CD?
Kurt
Dear Kurt,
There’s always a chance you’ll lose money if you leave it in mutual funds and bonds. That’s the nature of the market. But there’s another kind of risk based on what you’re proposing, and that’s risk of value due to inflation.
Assuming you two are in good health, you could expect to live another 10 to 20 years. Most current CD rates are less than 1 percent. Even if they rise to 2 or 3 percent in the future, do you really want to see that kind of return when inflation is likely to rise 4 percent annually? That’s in itself a type of risk, so I would urge you to keep that in mind.
No, I wouldn’t advise moving all of your money to CDs. If I were in your shoes, I’d live off the income generated by my mutual fund investments. As for the corporate bonds, I’m not a big fan of those. They entail almost as much risk as mutual funds without the good returns (on average) over a long period of time.
If you’re concerned about stability, I’m okay with you taking a little money from your bonds and putting it into a CD right now. But I wouldn’t touch the mutual funds.
Dave
* Dave Ramsey is America’s trusted voice on money and business and CEO of Ramsey Solutions. He has authored five New York Times best-selling books. The Dave Ramsey Show is heard by more than 11 million listeners each week on more than 550 radio stations and digital outlets. Dave’s latest project, EveryDollar, provides a free online budget tool. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.