It’s the First Friday bonus episode!
Helen discovered that her mother fraudulently opened credit card accounts in her name. Eek! How can she protect herself? What will happen to these accounts once her mother passes away?
Amelia and her husband cannot fire their financial advisor. How can they minimize the damage and maximize the benefit they receive from him in the meantime?
Anonymous asks if she should live off an inheritance and max out her 401k contributions during her first year of working full-time. She wants to reduce her taxable income. Is this a good idea?
A different anonymous caller read a USA Today article claiming that “index funds are in a bubble.” How true is this? How can index funds be in a bubble?
Shawn is self-employed. He invests in a Solo 401k that features both a Roth and Traditional component. How should he manage this account?
Another anonymous listener is thinking about downshifting to part-time work. He holds around $278,000 in home equity. How can he capitalize on this?
Former financial planner Joe Saul-Sehy and I answer these questions on today’s episode. Enjoy!
Here are more details:
Helen asks (at 01:32 minutes):
My mother opened accounts under my brother’s name and my name as she has our social security numbers. I subscribed to a credit watch service to receive alerts when new accounts are opened, but how else can we protect ourselves?
When our mother passes away, are we responsible for the accounts that she opened under our names without our permission? How can we prevent this from happening?
Amelia asks (at 10:22 minutes):
How can I maximize the benefit and minimize the damage of working with a financial advisor?
I’m comfortable self-managing investments; my 401k is invested in index funds. However, my husband uses a financial advisor for his Roth IRA and SEP IRA.
For personal reasons, it’s not possible to fire our financial advisor. Fifty percent of my husband’s portfolio is invested in a few large companies, and the rest is invested in mutual funds. Our advisor charges a one percent fee.
Are there other ways for our advisor to maximize our situation? I want to achieve financial independence within the next few years. I’m considering using rental properties to help make this a reality.
Shawn asks (at 30:34 minutes):
I’m self-employed and have a self-directed Solo 401k with a Roth and Traditional component. How am I supposed to keep track of my investments and which account they came from?
I was told that you can take money from both the Traditional and Roth accounts and put them into the same investment as long as you properly allocate the money back to each account from the investment.
How do I prove to the IRS that I’ve equally divvied out the money that I invested from each the Traditional and Roth account? Do they audit this? I’m scared to mix my Traditional and Roth money into investments; I don’t want to mess it up.
Anonymous asks (at 40:54 minutes):
I recently came across an article which stated that index funds were in a bubble. What does this mean for those of us who hold most of their investments in index funds? Are you nervous?
Anonymous asks (at 52:24 minutes):
My wife and I are a single-income household with thin monthly margins and significant equity in our home. I want to work part-time to spend more time with my family. Can we capitalize on our home equity and grow those dollars long-term, whether we stay or move?
Here are the numbers:
We’ve been in our house for six years. We owe $172,000 on our home and are one year into a 15-year note at 2.875 percent interest. We live in the Denver area and our home is valued at $450,000. Our mortgage is $1,893 per month, which is 45 percent of our take-home pay.
What should we do?
Anonymous asks (at 59:50 minutes):
I live in Seattle and earn $100,000 per year. I graduated college debt-free and started my first full-time job in September.
I have inheritance money left from my grandparents. Is living off the inheritance and maxing out my 401k a good idea? I’d reduce my taxable income, but I’d have less liquidity.
- Consumer Finance Protection Bureau: If someone dies owing a debt, does the debt go away when they die?
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