Dave Says Column

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Dear Dave,
My husband and I have seven kids. What parts of your program work best for large families?

Dear Karen,
My entire plan works for a large family. Larger families just have more expenses. What does change — and you already knew this — is that it can be a larger financial burden. This isn’t criticism; it’s just a mathematical fact.

When you kick things into overdrive like you folks have done, two things have happened. One, you’ve extended the time that you’re going to be supporting the kids financially. Two, you’ve got a lot of baby birds to feed and clothe. Unless you have an astronomical income, it slows down the process of hitting financial goals like getting out of debt, because you’ve got a drain on the math side of things. It’s a wonderful drain; it’s a glorious drain; but mathematically speaking where the money is concerned, it’s still a drain.

You really don’t have any choice but to do a budget. Having seven kids doesn’t give you an excuse to live out of control or mean that living out of control without a plan is the definition of success. You’ve got to set more emergency categories aside in your budget. You’ve got to budget heavier for food, medical, transportation and things like that, because you’ve got more things pulling at you — and your money!

Commonsense calculation

Dear Dave,
I make $80,000 a year, and I was wondering if there’s an easy way to determine how much money a person would need to live comfortably after retirement.

Dear John,
A commonsense rule of thumb, if you’ve got your money invested in good growth stock mutual funds, is to pull from those funds at a rate that is lower than which they are growing. Otherwise, you’ll destroy them, right?

I tell folks if they want to pull off six percent to eight percent — I’m comfortable doing eight percent — then you’ve got to decide exactly how much you want to live on and what that means for your nest egg. If you want to live on $80,000 a year, it means you have to have a $1 million nest egg. If you want to live on $40,000 a year, then you need a half-million dollar nest egg for what we’re talking about here.

To get into that a little bit further, I would advise going to Chris Hogan’s website. He’s got a tool on there that takes just a few minutes, and it will give you exact numbers on what you need to do. It’s ChrisHogan360.com, and the tool is called the R:IQ — your Retire Inspired Quotient.

You can walk through it, and in just a few minutes you’ll know exactly what’s going on and what needs to happen!

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