Saving Up For Dad
Colby is single and making $70,000 a year. She has a car payment and a student loan. Should she be saving for her parents since they're getting older? Dave says no.
QUESTION: Colby in San Diego is single and making $70,000 a year. She has a car payment and a student loan. Should she be saving for her parents since they’re getting older? Dave says no.
ANSWER: You need to save and build wealth for you. As you build wealth for you, you may choose to use some of that to take care of family or friends or community. But you don’t need to have a “my dad’s an idiot with money” account. You don’t even need to have an account for when your dog needs an operation later. You’ll just have some money because you handle it well and sometimes you choose to use it for things and people that are in your life. Pay off the student loan and the car first using the debt snowball.
In the debt snowball, you list your debts smallest to largest and pay them off in that order. Make minimum payments on everything but the little one, and attack it with gazelle intensity.
It doesn’t matter about the interest rates. If you make $70,000 and owe $20,000 on your car and have two student loans with balances of $31,000 and $4,000, then that small student loan would be the first to be paid off. Then pay off the car, then the larger student loan. It’ll take you a little while, but you can do it.