It’s almost 2020, people! As we wrap up 2019, we’re digging deep into the mailbag to discuss more of our listeners’ questions. Listen to this show to hear a variety of situations and Pete and Damian’s expert insights. Perhaps you’ve been in some of them, or learn how to prepare for ones you might even find yourself in one day.
Can’t listen? Check the Show Notes!
- Writer 1 is wondering what to do with his home. His situation? His current home, which he purchased in 2008, is valued at $150-$175k. Having refinanced 4 years ago from a 30-year to 15-year, he owes roughly $42k, paying a nearly $650 mortgage, leaving about $100k in equity. He poses a few questions to mull over:
- Should he sell his home (in the current market), invest half with his advisor, and put $50K on the downpayment on another home?
- Should he sell this house and rent an apartment downtown, invest half and put the rest in the bank?
- Or should he stay in the house?
- Damian suggested: With $100k in equity, like their place, does it make sense to sell the home? Not really, if he’s comfortable where he’s at, and doing well in other areas financially, he should keep doing what he’s doing. He should focus on getting free from that mortgage, and then use the freed up cash flow in a few years to do other things.
- Pete suggested something entirely different: He could make some great cashflow by using the property as a rental, as his mortgage payment is quite low. He could then use that extra cash to subsidize his next payment. If he’s willing to be a landlord, he could totally rent out his current place.
- Writer 2 has a child going to College. Should they take $50,000 from 401(k) as a loan for their child’s college bills? They plan to be working for another +10 years, so they would definitely be able to pay it back.
- Trying to relieve their child from the burden of the cost of education… It’s admirable, loving, sacrificial…but don’t do it.
- it’s hard enough to fund the future (retirement), so you don’t want to take two steps back when you’re already on a good path.
- Compounding Interest is hurt when you take out a loan against yourself. It’s missing on the opportunities of the market. You can’t get that time back.
- Your number one priority long term, is retirement. You shouldn’t borrow, for college, from your retirement. There are other financial vehicles that are specifically made for that our experts can help you explore.
Click PLAY below to get all the goods. Happy holidays!
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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.