An anonymous caller is struggling with a tempting offer from her family to buy her first house.
Tyson is wondering if it’s a good time to convert his bonds into treasuries.
“Jaula” wants to know if she should count her side hustle income as part of her retirement money.
Chris recently tripled his income. How should he manage this unexpected surplus?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
P.S. Got a question? Leave it here.
Here are the details:
Anonymous asks (at 01:41 minutes): I rent an apartment with a roommate in Jacksonville, Florida. Our rent went up 17 percent last year and another 7 percent this year.
I feel stressed and I want to buy a house to stabilize my expenses.
I’m 26 and I make $77,000. If I save a 7 percent down payment over the next couple years, I could afford a $190,000 house with a 6 percent interest rate.
However, my dad is offering to lend me cash to buy a home at a 4 percent interest rate.
He’s pointing out houses that are $350,000. Factoring in maintenance costs and homeowner’s insurance, which is expensive in Florida, my monthly payment would be more than half of my take-home pay.
Should I consider this?
I’m concerned about being indebted to my dad, but the security of a fixed housing cost would alleviate a lot of stress for me.
How should we structure an agreement so that it doesn’t alter the dynamics of our relationship?
Tyson asks (at 21:36 minutes): The more I read about bonds and treasuries, the more confused I get. Can you explain the differences in simple terms?
I currently park 20 percent of my investments in Vanguard Total Bond Market (BND), but I’m wondering if I’d get a better return in treasuries.
Two funds I’m considering are Vanguard Federal Money Market Fund (VMFXX) and Vanguard Treasury Money Market Fund (VUSXX).
“Jaula” asks (at 29:35 minutes): I retired at 58 and my husband will work for two more years. I’m not sure how to think about my side hustle income as it relates to the 4 percent rule.
If I make a modest $20,000 per year for the next five years, do I multiply it by 25 and act as if we have an extra $500,000 in the portfolio?
Our net worth is $2.5 million in various IRA accounts, brokerage accounts, and cash.
Can you give me some ways to think about this extra income?
Chris asks (at 36:13 minutes): I recently switched careers and tripled my income, leaving me an excess of $6,000 to $7,000 per month after expenses, debt repayment, and taxes.
How do I take full advantage of this unexpected abundance of money?
I have $225,000 in retirement accounts, $18,000 in emergency funds, and $14,000 in cash that I use to dollar cost average into investments.
I bought my house for $265,000 in October of last year and I owe $210,000 on it. My car is worth $38,000 and I owe $27,000 on it.
I contribute 23 percent of my income to retirement. I have no other loans or credit card debt.
I want to enjoy life and give to my family when they’re in need, but also keep in mind that I have a future to plan for.
My questions are:
- Should I continue paying down my mortgage? I pay an extra $600 a month towards my mortgage, effectively making my 30-year loan into a 15-year loan.
- I contribute $200 a week to a total market fund. Should I increase that amount or diversify into other types of funds?
- Where can I find out more about Efficient Frontier Investing?
- Should I convert my 401k into a Roth account? What happens to my investments upon conversion?
- Should I get a financial advisor with an assets-under-management fee structure? Why or why not?
- I want to rent out my current home and buy a second home to improve my lifestyle. Should I use my home equity or wait longer to save?
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