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Not as bad, but still not smart

Dear Dave,
How do you feel about check cashing companies?
Norman

Dear Norman,
I’m not a big fan of check cashing companies. They’re not nearly as bad as payday lenders, but it still seems kind of silly to me there’s even a market for this kind of thing. If you want a place to cash your checks and store your money, all you have to do is walk into a bank and open an account.

I realize there’s a small segment of the population that some people in financial circles like to call “the unbanked.” This means that, for whatever reason, they avoid banks. That’s their choice, but in the process, they leave themselves susceptible to bad deals.

As I said, I don’t feel the same way about check-cashing companies as I do about payday lenders. But it’s still not a financially smart move to regularly pay a storefront operation fees just to cash your checks.
—Dave

Here's a better idea

Dear Dave,
I’m 27 years old, and I have no debt. In addition, I have a five-month emergency fund of $14,000. Recently, I started a new job making $60,000. I’ve been offered a 401(k) with no match, but I was wondering if instead I should open a high-yield CD.
Kris

Dear Kris,
You’re doing very well at a young age. Congratulations! I’m glad you’re thinking about your financial future, too. But I’ve got a better idea.

How about opening a Roth IRA with good growth stock mutual funds inside? That would be my choice. Fund it up to $5,500 a year, and make sure the mutual funds have strong track records of at least 10 years. This investment — growing tax-free — will be superior to a non-matching 401(k) or certificate of deposit. If you want to invest even more, you could then put additional cash into the 401(k) offered by your company.

With your income and maturity, plus the proper investment strategy, you’re likely to retire a very wealthy lady. Keep up the great work, Kris!
—Dave