Ask HTM - Diversifying to FI, Upside Down on an RV, & Extreme Lengths to Buy a Home #937
Jan 27, 2025
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Listeners dive into diverse financial inquiries this week! They explore whether a stocks-only portfolio guarantees financial independence or if real estate is a must. Navigating the distress of being upside down on an RV, they discuss alternatives like selling independently or renting for extra cash. Strategies for saving for a home are examined, alongside tips on credit utilization and managing retirement accounts. Personal stories add a relatable touch, emphasizing the importance of a balanced approach to money and life.
Diversification remains essential for financial independence, with index funds often providing a sufficient safety net against real estate risks.
Managing subscriptions through tools like Capital One's app can simplify household finances and prevent accidental overpayments from multiple services.
Credit utilization affects individual credit scores both per card and overall, necessitating careful monitoring to maintain a healthy credit profile.
Deep dives
Maximizing Retirement Savings with Rollover IRAs
An old 401(k) can often become a burden if not managed properly, making it crucial to consider rolling it over into a Fidelity Rollover IRA. This type of account offers the benefits of no account fees and no minimum balance requirements to open, making it an accessible option for many. The rollover process is streamlined and can be completed in under 15 minutes, allowing individuals to take control of their retirement savings without unnecessary delays. Additionally, there is access to rollover specialists who can assist with the process, ensuring that retirement assets continue to grow effectively.
The Convenience of Managing Subscriptions
In today's digital age, households often subscribe to numerous services, which can quickly become overwhelming to manage. Capital One addresses this issue by offering credit card holders the ability to track, block, or cancel recurring charges through their mobile app. This centralized approach simplifies the management of various subscriptions, reducing the chance of accidental overpayments. With just one sign-in, users can keep their financial commitments organized, thus enabling easier oversight of monthly expenses.
Finding Lost Money through Online Resources
Many individuals may be unaware that they could have unclaimed funds waiting for them, and resources like MissingMoney.com and Unclaimed.org provide a way to discover these amounts. These online databases help users search for outstanding insurance payouts, abandoned property, or other unclaimed assets that might belong to them. Sometimes, individuals may miss important correspondence, leading to unnoticed funds; sharing this process with friends and family can help widen the search. It's not uncommon for people to find smaller sums of money, which, although not life-changing, can still provide a pleasant surprise.
Diversification in Investing for Financial Independence
When considering strategies for achieving financial independence, diversification is a key element that many investors contemplate. One listener expressed concerns about whether solely investing in low-cost index funds was sufficient, especially given the potential risks associated with real estate investments. It was highlighted that being well-diversified, even within the stock market, can often provide a strong enough foundation for achieving long-term financial goals. For those wary of the complexities and efforts tied to real estate, the simplicity of index funds can be a smart and effective approach.
Managing Large Purchases and Credit Scores
Large expenses on credit cards can significantly impact an individual's credit score, even if the overall utilization remains low. Credit utilization is calculated both at the card level and across the total credit available, meaning that keeping individual cards below a certain threshold is essential for maintaining a good score. A listener learned this the hard way when her utilization reached 45% on a single card, resulting in a substantial drop in her credit score despite overall low usage. To mitigate such impacts, individuals can consider paying the credit balance before the statement closing date or asking for an increase in their credit limits to maintain favorable utilization ratios.
Let’s dive into the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Is a stocks only portfolio diversified enough for financial independence or do I need to include real estate?
2 - What’s the best way to get rid of an RV that I’m upside down on?
3 - Where should I park cash that I’m saving up for a down payment, or should I invest those funds?
4 - For my credit score: is credit utilization calculated on each individual card or the total credit available across all of my cards?
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