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This week on the show, everyone is trying to find a new normal. Pete and Damian are social distancing, not for the first time as they pull out common questions from the mailbag.
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Can’t listen? Check the Show Notes!
- What Happened: Flattening the curve of Coronavirus (COVID-19) spread has dramatically altered the way we live, work, educate, play, and socialize all over the world. It’s also changed “money” as we’ve known it in our lifetimes.
We want to show you how to prepare yourself financially for uncertain and tough times like this.
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- Question 1: “My wife and I are early 30s and we have two kids, 4 and 5 years old. My salary is $125,000 per year and my wife stays home with the kids. We have 3 months of savings in an emergency fund, I contribute 11% to 401k, $100/month to an IRA, and $5,000/year to 529 accounts. — Should I lower my 401(k) to the company matched 4% and increase my savings this year?”
- OUR THOUGHTS: Yes. No problem with bolstering your savings. If at the end of the year, they don’t need the money, put it in an IRA.
“Where do people get diversification wrong with it comes to stock investing?” — They tend to focus on one company or one industry. That’s not true diversification.
“My emergency fund is minimal from paying down consumer debt. Should I start making minimum payments on debt to get to 3-6 months of an emergency fund?” — YES. Save some cash. If we get out of this crisis, put some towards the debt.
“I have no savings. Planning to use income tax money to pay off bills. Should I stick with that plan or start a savings account?” — SAVINGS ACCOUNT. That’s really step one, then worry about paying off debts.
“Thoughts on dwindling 401(k)? I’m in late 50s. Hoping to retire in 5 years.” — You probably won’t. Make sure you’re allocated properly with your advisor, but reframe your time period for retirement. 5 years may be possible, but in all likelihood, it could get pushed out a bit.
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.