Ask HTM - Birth Now Pay Later, Forcing Home Equity with a Basement Build, & Saving vs Paying Credit Cards #946
Feb 17, 2025
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Dive into useful financial tips from listener queries! Explore the 'baby now, pay later' concept and its surprising implications. Find out how to finance basement renovations wisely while considering home equity strategies. Learn about saving vs. paying off high-interest credit card debt and the importance of building an emergency fund first. Plus, hear insights on navigating pensions after relocating and uncover investment opportunities with guaranteed returns.
Exploring interest-free hospital payment plans for new parents can prevent debt while easing immediate financial burdens related to childbirth.
Home renovations, such as basement buildouts, can enhance property value, and careful financing through HELOCs may offer a strategic investment approach.
Establishing a small emergency fund is crucial before tackling high-interest credit card debt to avoid falling back into financial challenges.
Deep dives
Managing Subscription Services
Households today often rely on a variety of subscription services ranging from music and TV to even everyday products like dog food. While these subscriptions can enhance convenience, they can also lead to management challenges as the number of subscriptions grows. Capital One addresses this issue by allowing credit card holders to track, block, or cancel recurring charges easily via their mobile app. This functionality empowers users to manage their subscriptions in one place, ensuring they only pay for what they value.
The Value of Professional Financial Advice
Even those with a strong financial background can benefit from consulting with certified financial planners. The episode discusses the value derived from working with a financial advisor from Domain Money, who meticulously analyzes personal financial circumstances and helps in crafting tailored financial strategies. For a limited time, Domain Money offers free 30-minute strategy sessions, providing an accessible introduction to professional financial guidance. This opportunity highlights the importance of obtaining expert insights to enhance personal financial planning.
Home Renovation and Financing
Listeners are encouraged to consider home renovations, like finishing a basement, as a strategic way to add value to their home. A listener questions the best financing methods for a $60,000 renovation, with insights shared regarding the use of Home Equity Lines of Credit (HELOCs). While current interest rates may be higher, the potential value increase and the ability to avoid moving make renovation an attractive option. The conversation emphasizes exploring various financing options while also stressing the importance of managing debt effectively.
Strategies for Paying Off Debt
When faced with the choice between saving money or paying off high-interest credit card debt, it's recommended to establish a small emergency fund first. The idea is to avoid sliding back into debt after making progress towards payoff, which often happens when unexpected expenses arise. Maintaining a safety net of cash can alleviate financial stress and pave the way for a more effective debt repayment strategy. After securing emergency funds, listeners should focus on taking aggressive steps to eliminate high-interest debt, including potential frugal spending measures.
Investment Options and Guaranteed Returns
Listeners searching for guaranteed investment options that yield higher returns than traditional savings or CDs are reminded that such things do not exist without associated risks. While high-yield savings accounts and CDs currently offer decent rates, they cannot provide absolute guarantees against lower returns. The episode explains the importance of setting expectations in a low-risk investment environment, emphasizing that any investment opportunity claiming guaranteed high returns should be approached with caution. Ultimately, individuals are encouraged to make informed decisions in line with their risk tolerance and financial goals.
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 - Should we take advantage of interest free payments offered by our hospital after a baby delivery?
2 - What’s the best way to finance a basement buildout?
3 - After we move out of state, what should we do with my wife’s pension that she will no longer qualify for?
4 - Is it smarter to focus on building up my savings or paying off high interest rate credit card debt?
5 - Can you recommend a guaranteed rate of return over 4% with a term of 12 months?
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