Ask HTM - Down Payment vs Investing, Financial Calculators FTW, & the Best High Yield Business Account #757
Dec 4, 2023
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The hosts answer listener questions about high yield business accounts, using financial calculators for variable income, and finding and screening tenants. They discuss the dilemma of pausing retirement investing to save for a home down payment and share ideas for nontraditional holiday gifts. The limitations of financial calculators for accurate projections are explored, and the debate between investing in a Roth IRA versus saving for a home down payment is discussed with a balanced approach recommended.
Consider your reasons for buying a home before deciding between investing in a Roth IRA or saving for a down payment.
Take into account the market dynamics of your local area when deciding whether to rent or buy a home.
Use personal finance calculators like Net Worthify and Projection Lab to accurately project your finances, especially if you have a variable income.
Deep dives
Consider your motivations
Before deciding whether to prioritize investing in a Roth IRA or saving for a down payment, consider why you want to buy a home. If it's purely a financial decision, investing in the Roth IRA may yield higher returns. However, if you're looking for a place to put down roots and build a sense of community, buying a home can be a great lifestyle move.
Evaluate market dynamics
Take into account the market dynamics of where you live. In some areas, renting may be more financially prudent due to high home prices and the gap between rents and monthly mortgage payments. Consider the feasibility and affordability of buying a home in your local market.
Personalize your decision
Ultimately, this decision is personal and depends on your own financial goals, preferences, and circumstances. It may be worth pausing Roth IRA contributions temporarily to save more aggressively for a down payment, especially if homeownership aligns with your long-term plans and brings you joy and stability.
Exploring Personal Finance Calculators
Personal finance calculators, such as Net Worthify and Projection Lab, can help individuals create accurate financial projections. These calculators allow users to input their variable income status and manipulate various data points to get a more accurate picture of their financial future. Net Worthify is a popular calculator that offers a simple snapshot of an individual's financial situation without requiring account linking. On the other hand, Projection Lab offers advanced functionalities, including income variability inputs and the ability to manipulate data points to create more accurate projections. Both calculators provide valuable insights for individuals looking to plan their finances effectively.
Alternative Gift Ideas for the Holiday Season
Instead of giving meaningless stuff during the holiday season, consider alternative gift ideas such as experiences, donations, homemade gifts, or gifts with sentimental value. Experiences like restaurant gift cards or tickets to shows or events can create lasting memories and prioritize quality time over material possessions. Homemade gifts and personalized items can also add a special touch and show thoughtfulness. Donating to charitable organizations on behalf of loved ones is another meaningful gift idea. By shifting the focus from consumption to relationship-building and giving back, these alternative gifts can make the holiday season more worthwhile.
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 - What is the best high yield business account that also pays the highest rate of interest?
2 - How can I use a financial calculator to project my finances if I have a variable income?
3 - As rental property owners, what are your favorite ways to find and screen tenants?
4 - Should I pause my retirement investing in order to more quickly save up a home down payment?
5 - I’m sick of giving folks meaningless stuff around the holidays. Ideas for incorporating nontraditional gifts?
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During this episode we enjoyed a Green Flowers by Other Half Brewing- a big thanks to Jason for sending this one our way! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!