No 401(k) Employer Match? It's Time to Move Your Money

Dear Dave,

I’m divorced and have a teenager who will be driving soon. What would be the best way to set up insurance for the child?

Mike

Dear Mike,

I suppose a break-up does change the dynamic somewhat, but with my kids I simply left the car in my name and paid the extra insurance cost for a little while. For me, still being in control of the car as a dad outweighed the additional money I was paying in premiums. Having a minor child running around in the world with his or her name on a car title is not a good plan.

Then, when they turned 18, I put each of their cars into their names. This, of course, was dependent on them behaving and acting responsibly. They were legally liable at that age too. I’m sure the insurance costs went up, but at that point the financial risk and liability factors were on them, not me.

In this kind of situation, especially because there’s more of a potential for disagreements, I think I’d do it that way. Just put it in your name for now, especially if you’re putting money toward the purchase of a vehicle.

-Dave

Dear Dave,

My employer recently stopped matching my 401(k) contributions. Together, my husband and I make about $100,000 a year. Should I continue to invest in this option, or should I put money into an IRA?

Linda

Dear Linda,

If possible, I would put 100 percent of my retirement savings into a Roth IRA with good, growth stock mutual funds before messing with a non-matching 401(k). But remember, my goal if you follow the Baby Steps is to be debt-free except for your home, and have an emergency fund of three to six months of expenses, before you begin setting aside for retirement. These are the steps that allow you to be prepared for emergencies and free up your largest wealth-building tool, which is your income.

With your income, both you and your husband could open Roth IRAs and contribute $5,500 each in 2013. That’s a total of $11,000 toward retirement next year, and it’s only 11 percent of your income. With this in mind, I’d advise going ahead with your 401(k)s after your Roth IRAs are in place. That would flesh out the remaining four percent and give you guys 15 percent of your income going toward retirement!

-Dave

* Dave Ramsey is America’s trusted voice on money and business. He’s authored four New York Timesbest-selling books: Financial Peace, More Than Enough, The Total Money Makeover and EntreLeadership. The Dave Ramsey Show is heard by more than 6 million listeners each week on more than 500 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.