Ask HTM – Best Credit Cards for Honeymooners, Paying Extra on a Mortgage, & Buying a Car from a Rental Agency #778
Jan 22, 2024
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Topics discussed in this episode include tackling HELOC after getting laid off, best credit cards for honeymoons, paying extra on a mortgage, saving for kids with 529 accounts, and whether it's frugal or cheap to buy a used Tesla from a car rental agency.
Making extra mortgage payments can result in larger profits at the time of sale, but consider other financial priorities.
529 plans offer flexibility in using funds for education or retirement and can be directly funded into a child's Roth IRA.
Thorough research and inspection is crucial when buying a used car from a rental agency, considering long-term costs and benefits.
Deep dives
The Benefits of a Biweekly Mortgage Payment
Scott's question about the benefits of a biweekly mortgage payment is addressed. The hosts discuss how making biweekly payments can lead to significant savings on interest over the life of the loan. While the average American doesn't stay in their home for the full 30 years, making extra payments still reduces the amount owed and can result in a larger check at the time of sale. However, they also caution Scott to consider other financial priorities, such as retirement savings, before solely focusing on paying off the mortgage.
529 Plans and Saving for Children's Education
The hosts explain that 529 plans have become an even better option with recent changes in the law allowing unspent funds to be transferred to a Roth IRA for the child. This provides flexibility in using the funds for higher education or retirement. They discuss the advantages of 529 plans, including the ability to save for a child's future, and the option of directly funding a child's Roth IRA once they have earned income. They also mention other options like Agma or Utma accounts, but express a preference for 529 plans or Roth IRAs for saving for children's education.
Considering a Drastically Discounted Electric Car from a Rental Car Company
The hosts tackle a question about whether it makes sense to buy a discounted electric car from a rental car company. While the initial price may be attractive, they discuss potential drawbacks such as higher mileage and wear and tear on the vehicle. They encourage thorough research and inspection before making a decision. They also emphasize the importance of reviewing the vehicle's history, maintenance records, and warranty coverage. Overall, they advise considering the long-term costs and benefits before purchasing a used car from a rental agency.
Choosing the Best Credit Card for Wedding Expenses
When planning a wedding and considering using credit cards for expenses, it is important to find the best card that offers rewards or cash back. The Chase Sapphire Preferred and Capital One Venture cards are two top choices for their robust benefits and minimal annual fees. These cards provide secondary benefits such as car rental insurance and 0% foreign transaction fees. It is recommended to start with one card each to keep it simple and manageable, and later explore adding complexity to maximize rewards. Additionally, the Southwest Companion Pass is worth considering for future travel plans, as it offers significant savings on flights.
Making Mortgage Payments: Biweekly or Monthly?
When deciding between biweekly and monthly mortgage payments, it is important to consider the length of time you plan to stay in the property. While biweekly payments can help pay off the mortgage faster and reduce interest, if you do not plan to live in the property for the full 30 years, the cost-benefit calculation may change. Biweekly payments may still be a good option if you can afford them, but it is important to review your specific circumstances and goals before making a decision.
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 - How should we tackle our HELOC after getting laid off?
2 - What are the best credit cards to consider for our honeymoon?
3 - If we don’t plan to stay in our new condo for the next 30 years, does it still make sense to make extra payments?
4 - Are 529 accounts the best way to save for my kids?
5 - Is it frugal or cheap to buy a used Tesla from a car rental agency?
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