First Time Home Buyer

Updated : Sep 01, 2019 in Articles

First Time Home Buyer


it’s the weekend and you have financial
questions that need answering that can only mean one thing
it’s time for Jill on money the show that takes the mystery out of your
finances here’s your host Jill Schlesinger welcome welcome it’s Academy
Award weekend and just so happy to be nominated thank you very much mark was
kind enough to make sure that I watch a few of the movies mark we watched crazy
rich Asians it’s hysterical loved it loved it
then we realized we’d never watched one from last year so we did the phantom
thread which was good you know the guy who is the the dress maker in London and
it’s Liam Neeson’s isn’t that Liam Neeson Daniel day-lewis says sorry
Daniel day-lewis is last movie I enjoyed I took a little nap in the middle of it
I’ll admit it I’m not so proud I don’t get enough honestly I just don’t get
enough sleep so therefore sometimes if the movie is a little bit slow on a
Saturday afternoon I could call snow or drop off a little bit um I’m gonna do a
star is born before the Academy Awards I want to check that out hey if you’ve got
a financial question don’t forget to give us a holler did I say that we’re
broadcasting live from the Capital One Bank studios let me do that first
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doing taxes I always do my prepare my taxes mark during the Academy Awards I
do it’s a little bit of a tradition in our household because the Academy Awards
so boring most of the time so it’s a good thing to
do I mean I’m checking on it immediately of course alright so the way that we
like to start the program is with a caller and today we have a caller and
we’re going to start the program with Lamar and Lamar is calling us from the
New Jersey the great state of New Jersey the Garden State so mark and I when we
have with just a random name he says let’s guess where he’s from and I said
Lamar is obviously from Texas and yet you’re from New Jersey so I guessed oh
yeah that’s correct and raised here all right all right friends with Bruce
Springsteen what’s going on how can we help you
yeah so I’m in a very peculiar situation all planned out of course but my wife
just got my wife and I just got married about seven months ago we are expecting
our first child as well even in August this year and we’re also looking to buy
our first home grant and we actually did put an offer on a house last week and I
was accepted so we are now going through training review and the paperwork just
to make sure we get everything squared away okay you know the question I had
was that there’s a lot of upfront costs associated with buying a first-time home
first home yeah and we’re just trying to figure out the best way to go about that
and we calculate there’s gonna be about twenty five thousand dollars up front
probably in the next few weeks that we’ll have to cough up okay do you have
it have you saved that amount away yes yes so I do have I have about twenty
five K savings I had some stocks as well personal and employee stock that I have
she has some savings as well so we do have it to cover it okay wait a second I
just need some details so you have 25 grand in savings how much in stock that
is and if you have company stock just tell me what’s vested so we I have about
maybe I think it’s about 17,000 right now company stock but I’m only able to
touch about a thousand they have a requirement where you have to hold it in
there for one year yep okay so there’s only pulled about
eight thousand right and what about others stuck and in my personal I had
about twenty six hundred and and personal stock okay so we have 12 we
have ten grand basically in stock that we have avail
yes okay now your wife how much money does she have in savings she said that
she can probably do 5,000 like contribute 5,000 to this okay and 25,000
up front okay and so you are going to put down 25,000
and my question is how much is the home costing you so the house will be 400,000
that’s a pretty small amount of hey ma’am yes we’re looking at three and a
half percent up front our down payment with a four and a half percent interest
rate this is an FHA loan it is okay and and and how much do you guys make
together she just got a promotion to about 100k the last two years I made 160
and 150 and I’m in a sales role and then last year I made about 110 okay so we
will be this year a little over 200 okay um
200 so what’s the rush to buy a house so our lease a current lease my apartment
in in August and my wife is doing all this hmm don’t want to be in a situation
where she’s coming back from the hospital and then we have to figure out
where right here yes okay so what do you think are when you looked at the numbers
okay tell me what you can you and you ran these numbers you have a mortgage
amount that you’ve been you’re qualified to or pre-approved for but what do you
really feel like you can afford as you run the numbers on your $200,000 income
yep so my plan is to confirm the ten thousand for my savings and then sell
another ten thousand stocks that could be twenty thousand there plus my wife’s
five thousand that should cover the upfront cost right that would leave me
with fifteen thousand savings and of course with the baby coming I’m going to
be able to not really touch my savings as I as much as I can at least for now
mm-hmm but we have another six months of course before the baby comes
but you know we’re we’re thinking that the mortgage it’s going to be around
three thousand itself per month just the mortgage or is that the mortgage and the
homeowners and the property taxes because you’re going to be in New Jersey
with your high property taxes hold on don’t answer that question because
because mark is got telling me I have to go to a break so let’s go to break and
come back and then you have to think during the break if three thousand
dollars a month is kind of all in what would it cost you to rent a similar
place just for another year or two even if you just did that now so that’s what
I want to know think about that during the break when we come back we’re gonna
walk through this and see whether or not this makes sense I’m a little nervous I
got to be honest with you I’m a little nervous about this game plan because I
hate three-and-a-half percent down I know FHA is very useful but you know
you’ve got you’ve got unpredictable income and so that can be a little scary
if things go wrong one year so when we return we’re going to get back to Lamar
from New Jersey born and bred from the Garden State and if you are listening
and you’re thinking well I’ve got a question like Lamar’s or something
completely different send us an email ask Jill at Jill on
money.com hey during the break here’s your homework
go to the website Jill on money.com sign up for our free weekly newsletter and
also go buy the book well yes the dumb things smart people do with their money
thirteen ways to write your finding Tehran’s we’ll be right back 401ks IRAs
refinancing she covers it all back to Jill on money with Jill Schlesinger
you’re back with Jill on money you know we’ve got a sister podcast too it’s
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before I went to the break we were talking to Lamar in New Jersey he and
his wife are expecting their first child and they would like to buy a home the
home would be purchased with an FHA loan which means you can put as little as
three and a half percent down and to scrounge up that three and a half
percent Lamar would use some money from savings some company stock and the cost
would be about three grand a month is that right Lamar did I did I give you
give the and you and your wife make about 200 grand ear is that right yeah
great okay so what have you had to actually rent another place what would
it cost so if we extended our current lease where we live now which space is
big enough for sure for at least an infant it right now rent a 1700 s mm-hmm
so let’s beat 50 eat that we spend so we continue to extend our current lease
that’s what we would what of what it would cost us mm-hmm okay and let’s just
let’s play this out a little bit on in on the if you’re renting at 1700 a month
and then you don’t have to plow through your savings and you have a little bit
of cash flow what’s gonna happen who’s staying at home with this kid what
what’s the game plan in other words are you gonna make less money this year
because of the baby is that another thing that we should kind of factor in
yeah so we have some family friends nearby that we can probably we still
need the game-playing that out I will have to be honest okay to engage okay I
know I hate that I think it might be premature for you guys to buy a house
and the reason why I think it might be premature is that you know you would be
depleting a whole bunch of your savings and I think you actually could use that
savings when you have the baby and I think you’re gonna know a lot more about
your financial condition when you have the baby live in your $1,700 a month
place for a little you know let’s say for another year and make do with that
the one thing I didn’t ask you was tell me a little bit about the debt situation
you have any student loans that are still outstanding yep
total student loans equal up to about ten thousand that’s good okay so then I
have an auto loan that also should be finished off by July 2020 and that’s
about ten thousand as well what is the rate on the auto loan please five and a
half percent I might start paying that down and the
student loan amount debt the loan interest rate may vary
I would say the most is probably five and a half percent as well yeah I mean
look while you are in the I think there’s a few things I think I would air
I would rent you may not listen to me and I get that I know it’s not very sexy
I would keep renting and I think that for the first year that you have the kid
what you want to do is you want to build up that savings you want to start
whittling down that debt especially the auto loan which you can probably I mean
the student loans especially if the five and a half percent ones I’d pay down
some but the auto loan I would definitely try to attack and I would use
your cash flow to pay down student loan debt and the height a high
interest student loan debt and the auto loan and beefed up your savings and I
think that you will be happier buying a place when you can have a little bit
more liquidity my concern for you Lamar is that if you look at you what you you
sort of listen to the story you just told me you’re making 200 grand you have
variable income but you might kill it next year you might make a lot of money
and be able to beef up those savings account levels in a much more dramatic
way and conversely what if you make less than that 200 what if instead of making
100 or 110 that you have a bad year or we go into I don’t know what you’re
selling but in sales you know we have bad years all the time and and if you
have a bad year you won’t stress out as much but I think
if you have that big fat mortgage yoked around your necks and you have a bad
year with a new baby yeah that seems like a lot to take on so I my
inclination is to hold off on the buying the place if you’ve already done it and
you sign the contract and you can’t get out of it and your wife is gonna kill
you and you’re you know you’ve got to let this marriage work then sure I think
that you know you can use some combination of selling stock and using
some savings and you know you might squeak through but I think it’s a little
dangerous right now and would you would you touch her for one at all no or you
just let that no I really wouldn’t because how old are you guys 31 and 32
yeah I don’t know I just I really think that you would be I think you’d be
better served by waiting I think that that’s going to be I think that that’s
really gonna be the key for you and I think you’ll be financially more secure
and I’d rather you not actually use the 401k money I think it’s been there it’s
great it’s safe good so let it be right and to me that is the the way that I
would manage it I don’t think that I would mess around I really don’t and I
and I know that’s kind of a drag because I know that you want to buy a place but
I think they I think you’re gonna go into it in much better shape a
year or two from now with a lot more knowledge about what your costs are I
mean what happens if your wife says I got this big raise but I want to go back
to that same job I love like hanging out with a baby and so I think that I don’t
know I want to give you some I want to give you some flexibility and I don’t
think you’re gonna have any flexibility at all no options if you buy this house
right now so I hope you can hear that I I know it’s a bummer but there it is
there’s my advice what do you think I like you said to your second point
probably can’t do much about it since we’re so far into it in the process
mm-hmm but I will tell you that I am projecting at least it started this year
a lot higher okay all right if that’s the case looking brighter all right well
if that’s the case then I’ll wish you luck and give us a call back tell us how
you’re doing okay awesome thanks you are very good take care where was that guy
calling me a little while ago Oh mark I worry about Lamar and his wife see
that’s one of those things I vote an entire chapter in my book to this you
buy when you should rent it’s a great example of it right there I’m not an
anti purchase kind of person I really I I like real estate
I like owning a home although I love being a renter too and I just I worry
that people are jumping into home ownership and robbing themselves of
potential flexibility and opportunities down the line that’s my fear and and
there you see it in that one conversation right mark easy to sort of
see that when it’s not you but when you’re in the middle of it it’s not good it’s just not good and
they’re gonna almost double the cost of of their housing they’re going to chop
up a lot of that savings and God forbid something goes wrong and even if he does
make more money maybe it’ll work out maybe it will okay and then in which
case I hope it does but again one of the reasons that I worry about people making
decisions like this is even if it does work out it doesn’t mean that was the
right decision the right decision is to be a bit more conservative sometimes and
wait for a better time to make a plunge like this but I know we’re rootin for
you Lamar and your wife Bruce and Patti of Garden State good luck
let us know how it goes hey you’re listening to Jill on money this is the
program that takes the mystery out of your financial life hey let us know if
we can help you out please please we do that do it okay we’ll be right back
ask Jill at Jill and money calm follow Jill on Twitter and Instagram for
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the show you’re back with Jill on money and this is the show that takes the
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do with their money it’s all there right on the website but let’s move this let’s
move this along here is a note from Donald who’s subject is an IRA rollover
can I rollover IRA funds to individual mutual funds or CDs sure why not what
you’d have to do is take the money that’s in the IRA rollover account and
make sure that it is housed in a place where you can buy those particular
assets most big brokerage firms can do that
why CDs I’m wanting to know that cuz I don’t know I don’t I’m not sure I want
you to be buying CDs with that but sure you can do it whether you should is a
completely different question and I would be remiss if I didn’t encourage
you to follow up with us and I’d like to hear more about what’s in there what
else you’re thinking about how you’re managing this give us a follow up okay
here’s a note from Doug who enjoys the financial columns I write for the
Tribune Company and we have most of those that are posted on our website
Doug writes I agree with your comments about the value of fire naysayers aside
so fire is financial independence retire
early that’s what that stands for Doug work continues and says I would
also suggest adopting the even stricter behavior of not ever withdrawing funds
from a retirement account yes I so agree with that retiring early is a great goal
it was one which Doug achieved by retiring at 56 Doug says quote I also
was drawn to your paragraph where you defined wealthy as Millennials with
$50,000 in investable assets I assumed you meant with $50,000 in discretionary
funds because I could never characterize such people as wealthy yeah I mean
that’s not really as that wasn’t necessarily my definition but yeah
discretionary investments essentially furthermore those same Millennials
better save first for an appropriate cushion an emergency reserve fund right
like CD or money-market and I agree with you a hundred percent
Doug thinks three to six months worth of living expenses and he writes one year’s
worth is preferable I totally agree Doug also thinks two years nah nah wouldn’t
even be so bad fiscally responsible behavior would also be consistent with
the fire philosophy based on your experience I’m quite sure you’re well
aware of the value of an emergency fund I just thought you should have covered
them in your article I have covered them quite a bit maybe not specifically in
this article and frankly when I’m you know when you’ve got your 600 word line
in the sand it’s can become a little bit difficult to cover everything so yes I
love a nice emergency reserve fund okay this is from Ted who’s got a $100,000 in
the Vanguard prime cap fund it’s a traditional IRA and he writes I’m
thinking about transferring $10,000 a year to a Roth IRA my adjusted gross
income was 72 thousand dollars last year which included about twenty thousand
dollars in minimum required distributions I can live on forty seven
thousand which included Social Security pension
and stock dividends what do you think about doing this it’s so what Vanguard
fund would you recommend transfer to so presuming that you have the money
outside I’m making this very clear outside of this retirement account and
you can pay the tax on the additional $10,000 then yeah sure absolutely go
ahead and do this in terms of what fund I don’t really I mean I guess it would
really depend so much Ted about what other assets you have if it’s just ten
thousand dollars maybe you use a just to Vanguard index funds and extended stock
market and a bond market but I think that it should be an overall it really
should be an overall strategy that would be helpful okay uh okay uh let’s do one
more how much time do I have two minutes oh how interesting another Vanguard
question hi Jill thanks for keeping me entertained financially this is from TJ
who’s 34 wife and he have $250,000 in retirement assets with Vanguard it’s in
401 K Roth and traditional and a Roth IRA for each of us we max out the ladder
and I should max out my 401k next year or by 2020 for sure I also have three
thousand dollars in a brokerage account with betterment love that I can buy
fractional shares my question should I partner with Vanguard Personal Adviser
services for 0.3% annually I want them to help guide me to retirement and
ensure I’m saving enough as possible to potentially retire early maybe age 55
or 60 also saving for my two year olds future college I also think this could
be helpful I’m withdrawing down the road I get access to a dedicated CFP once I’m
at 500 grand which will be in five years or so Vanguard seems like a as
safe choice for financial planning assistance am I missing something mark
would you like to answer that mark says no you’re not missing anything I think
that the those services from Vanguard are pretty amazing and the cost is
really cheap so I like that you look you may also wish to look at betterment
because they that you already have a relationship with betterment I should
just note that you know they have also access to a financial person and so that
might be worth it for you okay ah I think that’s it for right now what do
you think mark that’s good we’re getting through them we’re gonna keep doing some
more emails over and over and over as we’re trying to get through all these
emails am I still stuck in 2018 mark oh yeah he says I apologize if we haven’t
gotten to all of them it’s just it’s very it we really want to so we’ll get
there we’re gonna start adding some extra email only segments you’re
listening to Jill odd money ask Jill at Jill on money comm is our email address
we’ll be right back if you’ve missed any part of the show or want to check out a
pass she’ll go to jail on money.com for more great personal finance content
you’re back with Jill on money if you’ve got a financial question we would love
to help you out so the thing is it requires a tiny bit of work on your part
all you have to do is talk to us send us an email ask Jill at Jill on money.com
we will work really hard to get you on the air with us but if we can’t we’ll
read the email sometimes we don’t read them as quickly as you’d like I know
this if by the way it’s like a big important decision that needs to
be made and it’s time-sensitive let us know that okay here is a email from
Louis and the subject is a full sentence which I love and Louis the subject is
the retirement issue no money manager seems to want to talk about and in
parens not spending your principle after required minimum withdrawals
okay here’s what Louis writes hey Jill I’ve been meaning to email you for a
while but haven’t found the time until now the issue that has always confounded
me is what to do with your required minimum distributions from an IRA or
401k so as not to use up or spend your principal I know you need to hold back a
percentage to pay taxes so the government can get their cut but it
seems that the rest should be reinvested in another personal account to build
upon for new investment where there is a nice rate of return and no more
distribution required minimum distributions are md’s I feel this
process is not stressed enough by money managers that I listen to on TV and the
radio most of them are saying to keep working longer or make sure you have a
certain amount saved up so you don’t run out of money one day however if you
currently have enough income coming in and your distributions are reinvested
your principal should never run out only the top tax obligation is lost I’m
55 years old and will talk to a professional money manager soon to see
if I will be able to retire in the next seven to ten years so my question is
twofold do you feel this is the best way to keep
hold of your principal after your RMDs and where do you suggest investing this
money you know I feel like all of these things kind of work in conjunction with
one another so what do I mean by that you know working longer is a really good
way to prevent yourself from tapping into assets too early which by the way
is literally one of my chapters in my book the dumb thing smart people do it
with their money you know basically I I seen time and time again people spend
too much money early on in their retirement and it’s quite devastating to
your long-term future so either they’re retiring too early or they’re spending
too much early on the idea of not spending the required minimum
distribution is wonderful I just I’m worried because many people will not
have that option so it kind of depends what you’re trying to do I’m not one of
these people who thinks you should desperately try to preserve your
principle I’m okay with spending down your nest egg it’s really it’s fine with
me but if you truly want to maintain your principle clearly reinvesting your
required minimum distribution is a great way to do that it’s just that I just
don’t know if enough people have this option and and maybe some people don’t
really want to think about that but I like it I like it as an idea and I think
certainly it it makes sense again in concert with all the other things that
I’m sure you are doing specifically because you did that now and you talk
about a financial adviser one of the things I should also note is of course
of course you should be very suspect of the financial professionals out there
and one thing that you can do is you can hire someone who is basically bound to
put you before her or her firm meaning the fiduciary duty you want to choose
someone who is bound to do that and the best way that you can do that is to work
with a financial professional who has to do that simply because of the way he or
she is credentialed so that can be a CFP professional that can be somebody who is
works with as a member of naptha the National Association of personal
financial advisers NAFA org that is an accountant there me just came
back from a conference last month where I was with accountants who carry a
designation that’s called the PFS a personal financial specialist and there
are also some folks who are credentialed with something called a CFA and a CFA is
usually the kind of person who goes in and does institutional money management
or works in a big investment bank but some of those folks have gone into
financial planning so they too are held to the fiduciary standard again that
fiduciary thing it’s important it’s putting you before the adviser or before
the company and also it subjects that professional to disclosing any kind of
conflict that exists I mean it really isn’t almost everybody has some sort of
weirdo conflict out there which is fine just disclose it so that’s what I would
do Louis I like the I love reinvesting you’re required minimum distributions
and I love the idea of you getting some help the one differential among all
these professionals is those who are members of naphtha they cannot sell any
Commission products so there’s a slightly higher bar they jump over in my
mind okay you are listening to Jill on money
coming up we are going to do more going to answer more of your great questions
if you’ve got one hop on to Jill on money.com
contact us button right there on the top right ok we’ll be right back you’re back with Jill on money we are
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shoot us an email ask Jill at Jill on money.com
not the youngest email or ever but right up there this is from Darryl who is 18
years old I have the hugest smile on my face 18
years old and he writes hello I’m an 18 year old and in school I want to invest
$10,000 for retirement but do not know how to or where can you give me an idea
okay Darryl here’s the thing $10,000 for retirement is possible if you have
earned income so did you earn some money putting I don’t know on the book
somewhere you can certainly open up a Roth IRA up to your amount that you
earned I’m sure I don’t know maybe you earn more but the limit is six thousand
dollars this year and then the rest you can put into a general investment
account and I think that you know you can go to any of the big no load big
index fund houses so that could be Vanguard or tiro price or TD Ameritrade
or Charles Schwab or fidelity and each of those places has a way to invest into
a mutual fund and the mutual fund you might pick would be lets say a target
date fund a one fund with a bunch of money or maybe just put some money in an
index stock fund maybe and again if you’re really just gonna use this for
retirement not anything else maybe you’re gonna change your mind but like
70 or 80 percent in stocks and the rest in a bond index and you’ll be all set
but if you think you might want the money
for something else maybe it is you are going to need some money for college
that might be a good reason not to invest all of this money in risky stuff
so thank you so much for sending us this note good luck and let us know if you
have any follow-up questions you are listening to Jill on Money hey during
the break why don’t you go to the website Jill on money.com there you can
buy my new book the dumb thing smart people do with their money we’ll be
right back it’s the weekend and that can only mean
one thing you’re listening to Jill on money the
show that takes the mystery out of your finances here’s your host Jill
Schlesinger you are back it is our number two of Jill on money where we are
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alright have you gone to the website lately Jill on money calm because we’ve
got tons of stuff there we’ve got all these TV segments that I’ve done
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shoot us a note the contact us button is there or send us an email ask Jill at
Jill on money.com ask Jill at Jill on money.com that’s
what Roz did she asks what do you think of the asset under management or AUM
method of charging from a financial planner
now in doing my own research that method seems outdated your thoughts you know
why Roz I’m kind of fee agnostic when it comes to this stuff I think that if
you’re getting you know the reason why AUM doesn’t work well is when they’re
just doing asset management but if you’re getting asset management as well
as full financial planning then I think it’s totally fine but be clear that to
ask the advisor what will you be doing for me for that one percent of the asset
under management so really because I think that that’s
that tends to be the biggest issue in my mind that that if you don’t know exactly
what they’re doing for you and you’re paying up for it that that doesn’t make
any sense so ask the question be smart got another
question from Chuck just how can I find a good financial adviser in my area you
know I think that the most important thing
for people to remember is if you’re basically starting fresh right and you
say how do I find a financial adviser you want to talk to some of your friends
and get a referral that’s a possibility you also may want to talk to an
accountant and if you really are just stuck you’re starting from zero there
are two websites to consider one is the website for naphtha the National
Association of personal financial advisors and APF a.org
now that is going to give you someone who is fee only so for example in the
previous question from Roz then the person who charges AUM or maybe maybe a
naphtha advisor but if they sell something with a commission then they
would not be able to join naphtha the other thing that you can do is you can
actually try to go to the let’s make a plan dot org website that’s the CFP
boards website and you pop in your your zip code and the advisors in your area
come up but what we ought to really make sure you understand is that you still
have to do some homework you have to ask questions and so we’ve got on our
website the very clear document it’s under the resource section and it’s the
ten questions to ask before hiring a financial advisor so check that up okay
okay here’s one from Karen who says that a recent article that was posted on
LinkedIn was great and timely she Karen had just had her checking account
compromised eeeek I have a few questions for you
related to your article how there are basically questions about how to file
complaints and all of the ways that we do that so mark let’s just send her the
links to that which I bet you already have done and there’s also a question
about annualcreditreport.com which asks for your social is it safe to do this
through their website yes and the question about a credit card
notification program that is through each individual credit card
company so that is how those work if you are looking for information about how to
protect your identity we have lots of information out there
should we make that just a resource page link mark or not maybe Mark’s gonna
think about it well but it’s it’s out there mark will
send you the note okay this is from David who’s accountant suggested opening
a Roth IRA with six thousand dollars and I just don’t know which company to use
betterment charles schwab fidelity Vanguard I don’t want to micromanage the
account I just want to let the company do it I have a set plan with Oppenheimer
we’d rather use someone else for diversification any help would any help
would be helpful okay so David if you want to just sort of put
it on autopilot I think that you may want to choose either Bennett betterment
or Vanguard Vanguard has the personal financial solutions part of this which
is basically their Robo advisor either one of those about a quarter to 0.3%
annually that’s gonna do it for you I think very easy why do you still have a
set plan at Oppenheimer I’m kind of interested in that maybe you want to
move everything over because Oppenheimer I believe is gonna be more costly so
there’s the question for you I’m not sure so I’d love to hear back from you
about what’s up with the Oppenheimer piece okay Theresa writes as my husband
and I approach retirement we’ve scheduled meetings with different
financial planning so planners were trying to decide who will manage our
finances when we retire at our last meeting we were told that we need to
create a trust we have homes in two states Colorado and
Tennessee our children are 32 and 27 years old when I asked why we need to
create a trust we were told that a trust will prevent our children from going to
probate I thought that a will is all that’s needed why do we need to create a
trust if we do need to create a trust do we need an attorney in both states hmm
that’s a good question okay so trust as
that’s pass outside of the probate court and a will does not however there is
something called a pour-over will that will create a trust after your death
that’s a possibility I don’t know the question about the weather you need a
lawyer in both states to draft this I would presume that whatever is your
primary residence is what you should probably think of as the place where you
get the attorney I would I guess I want to know a little bit about what else is
going on in your financial life because if you have a lot of money then that’s
one good reason to try to create a trust in some cases the probate process is not
that difficult so I would really before you start paying for an expensive
attorney to draft those kinds of documents I’d go talk to the attorney
and get an opinion as to whether or not you need that okay all right how much
time how much time fifty seconds okay here’s a quick fifty seconds from birdie
I love this I received from some money from my mom who passed away last year I
put it into a money market account at a local bank it only makes point one five
percent I’m 64 and I have only Social Security coming in right now I don’t
want to lose that money but it should I know I should put it somewhere so it can
make more interest doing online savings I feel disconnected I’m not sure if it’s
a good idea yes it is a good idea okay so here’s the deal if you don’t want to
just hand it off to anyone go to deposit accounts calm look there for the best
places the online banks are going to be best for you
don’t worry it will be okay alright thank you so much for writing if you’ve
got a financial question we want to hear from you just go to jail on money.com
you can click on the contact us button and we will get that message and while
you’re on the site be sure be sure to sign up for our free weekly newsletter
we’ll be right back do I invest here should I put my money
there Jill Schlesinger can help you back to Jill on money your back with Jill on
money and if you’ve got a financial question it’s very easy to contact us
you can send us an email it’s ask Jill at Jill on money.com
ask Jill at Jill on money.com and head over to the website Jill on money.com
where you can read the articles that we write listen to old shows watch TV
segments and videos buy the book the dumb thing smart people do with
their money and sign up for a free weekly newsletter how about that all
that in one place fantastic let’s we’re trying to clear out the
email box and what month of my end mark have I gotten through all of last year
not yet almost almost all right here’s a note from Joe who’s got a concern about
GE corporate bonds he says four years ago I inherited a hundred forty thousand
dollars in GE corporate bonds that were earning 5% with a maturity date of July
of 2024 my plan was to hold the bond to maturity because of the rate with all
the ongoing problems with GE do I need to be concerned with default on this
bond should I keep it as planned or sell at the current market rate and avoid the
risk of default between now and 2020 for a yeah yeah I just I don’t know what
else is going on in your life do I really think GE is going broke no I do
not but if you’re telling me that the only money you had was an investment in
a $140,000 GE bond I would tell you to sell it so I need a little bit more
information so in other words do you have another $100,000 $100,000 in other
stuff do you have another million dollars in others
that will help determine how much risk you can absorb with this one holding
generally you’ve heard me say this before I don’t like having more than 5%
in a single holding and that includes an individual bond because of the risk so
it could be an individual stock and maybe it’s your employer stock in your
retirement account but you know I think the problem here Joe is that if I don’t
know more about you it’s hard to make that determination that said like I said
I don’t think that necessarily Gigi’s going broke but send me more
okay here’s Joanne who saw a piece that we did on CBS and I had mentioned that a
large percentage of people would not be able to deduct their contributions to
charities on their taxes I had a friend very upset about not being able to duck
this I called the IRS they told me that the contribution amount a person could
deduct had doubled I don’t know he spoke to but the problem is if you don’t
itemize you can’t deduct your contribution okay that’s the deal
so hope you have that that’s just that’s how charitable contributions work and so
if you are not a if you do not itemize your deductions your charitable
contributions cannot be deducted that’s that’s the bottom line
if you do itemize then yeah sure all right let’s see here who is this
Robin was asking about the eggs being an executor of someone’s estate do you
recommend any resources or guides that could be helpful for someone new to all
of this hey Mark let’s send her the I think I have a I have to find it I think
I had a post that I did after my dad died about settling in a state
and so there I think we’ll send that to you but I’ll find it Robin don’t worry
okay not easy it’s actually a bigger pain in
the neck then you would think all right here we go oh this is from
this is from February you’re sending me February emails just you go and top to
bottom bottom to top okay Jill if I’m married but but filing single with four
months gap between jobs is the tax return calculated differently
oh boy okay so I don’t know this I mean I think so tax it your here’s how taxes
are captain mark let’s send her the article I just wrote about the tax
primer so your income that you have had at some employer has had money withheld
for taxes unemployment received there is money withheld for taxes and if your
total tax that’s due is less than the amount that you withheld you are going
to owe money if it’s more if you’ve withheld more than the tax due then
you’re going to get a refund so I don’t know exactly how married filing single I
didn’t think it’s weird married filing single I never thought that that was a
great advantage I think you might want to talk to somebody about that but
anyway our son Drew was in college and how is a
dependent well either you or your son I mean sorry either you or your husband
will claim your son and if you’re claiming your son you can still claim
him because he’s in college and he’s a dependent and the last question is her
husband’s a big fan of TurboTax and is it suitable yeah why not
TurboTax is good but if you make less than sixty six thousand dollars then use
the IRS free file that’s the best thing you can do that’s the best system right
there so I would try that out Tim writes I have slightly over three
thousand dollars that I’m required to withdraw from my IRAs thanks to my Air
Force retirement paying Social Security I do not need the money right now so I
don’t know what to do should I transfer it to regular savings or maybe a CD
thank you for your assistance sure you can just add it to your emergency
reserve you can put it into an investment account you can do anything
with that money pay your tax and move on very good uh Oh God poor Jackie she
ended up making too much money to contribute to her Roth IRA and so she
had to recharacterize her contributions into a traditional IRA can I now
backdoor that for tax year 2018 ah that’s interesting
I think you can but don’t forget if you’ve got other IRA money or their
traditional money that could be a complication there’s two choices it’s
either gonna be a traditional IRA and you take the deduction for it and now
you have a traditional IRA and then you can then convert that either this year
or next year the question I have for you is that do you make too much money to
make a – grit to grab the tax deduction associated in which case you would have
a non deductible IRA and that could also be read be turned into a Roth but if you
have other existing IRA money then you must factor that in and it may not work
so I need a little bit more information Jackie uh okay here’s a question here’s
a note from Barbara who read an article that I wrote about tribute to the father
of index fund index funds which I wrote about Jack Bogle and Barbara says it
reminded me of my boss Jack Dreyfus the founder of the Dreyfus mutual fund as
you know he invented the commonplace mutual fund on Wall Street he was better
known as the Lion of Wall Street I was his personal assist
for the last decade of his life in any case his ads for mutual funds were
things like we treat your money as if it were our mother’s money and the fun was
directed towards everyday individuals not just professional investors your
article brought back good memories for me and for that I thank you well thank
you Barbara what a nice note you know what my first mutual fund that I owned
Dreyfuss the Dreyfuss New York municipal bond fund and my father bought that for
me and my sister and that was where we had our college money and we had to
write our own checks for college because my father says you got to write that
check you see how now you show up to class which I did I was a good girl come
on what do we got one more no my daughter has three girls age five three
and one she started saving for all of them and
she informed me that she wanted the money I usually give her and her husband
for Christmas to go into the account I did and received a thank-you note via
text she thanked me and told me what a good investment it was then she finished
saying that she would do her best to steer her girls away from a liberal arts
education I’m sure you really don’t care but I thought it was funny and I’m
hoping it makes you smile hey Huey you know what that’s so sad
I love with liberal arts education but thanks for writing I was a product of a
liberal arts education it’s Jill on money and if you’ve got a question give
us a holler email us ask Jill at Jill on money.com we’ll be right back if you’ve missed any part of the show or
want to check out a past she’ll go to jail on money.com for more great
personal finance content you’re back Jill on money like I do that little paws
like set it apart so you know what it is you know here’s the deal you know these
authors have come on the show I’m an author now some dude interviewed
me for his podcast and radio show mark it was such a bad interview because he’s
interviewing me about my book but he’s plugging his book constantly I was like
I knew that was going downhill fast so first he’s like oh we do a video
right I just taken off all my makeup and I didn’t know that most of these
interviews are you know audio I took off all my makeup I changed my clothes I’m
in my house I click on it goes oh I don’t see you can you click on your
camera I said yeah I’m not gonna do that I’m sitting here in my sweats with a
high ponytail and a baseball cap I’m going to the gym and a half an hour so
let’s get this over with okay nothing on that vein but really it was
not exactly I don’t know why anyone cares about watching someone talk into a
microphone you know that’s not I never understood like why I must put a put a
video of him doing a radio show it’s much more fun listening than watching
all right which is why you’re here and you’re listening and we thank you so
much and we’re so grateful that you are listening I’d be so much more grateful
if you bought the book and then reviewed it on amazon.com or on any of the sites
where you buy your books it’s called the dumb things smart people do with their
money thirteen ways to write your financial wrongs please I need reviews I
don’t know why the publisher said I’m I would never ask for you otherwise
here’s a email from Jeremy he and his wife are both teachers
he’s 35 she’s 30 they’ve got retirement account she’s got
a Roth he’s got a 403b separate all that is separate from their pensions oh gosh
he says my question is I have multiple multiple sclerosis only fortunately my
condition is not progressive but I want to plan for the future I’ve heard about
medical savings accounts for families to plan for future long-term care purposes
this is separate from a medical plan HSA account can you advise me in the correct
direction of something that may help ensure that my wife will have help and
will have money in the future in case I’m anybody work due to my illness in
the future I only know about like the traditional HSA account that is offered
through an employer so the which is a tax exempt account or a custodial
account and you’ve got to set it up with a qualified HSA trustee and you’ve got
to be I mean there’s there’s a lot of rules around it but you would know
whether you have an HSA through work I don’t know about the other this other
thing you’re talking about if you’re talking about long term health care you
wouldn’t be able to get underwritten anyway so usually a health savings
account is paired with something called a high deductible health plan maybe you
have it I don’t know maybe you guys have it through your employer and it it’s you
know you can put away a bunch of money oh six or seven grand for individuals
over thirteen grand for families so gosh I don’t know what you’re talking about
so I may be your just need to save more money in a regular account I just would
be very careful if you’re gonna be buying some I just feel like maybe some
insurance person may have sold this but maybe there are some hybrid life
insurance policies that you may be able to purchase in addition to what you have
and maybe those would be available I don’t know I don’t know if it’s like a
separate thing but anyway I would before you do anything I think that because you
had this condition I probably would sit down with a financial planner and maybe
a fee-only financial planner or someone is not gonna necessarily sell you
something that’s what I would do try that out let me know how that goes
Rena writes I’m 46 years old I’m in the military I’ve got credit card debt I’m
trying to pay it off with a side hustle nice and I’ve got a small business and a
financial advisor and savings and investments should I focus on paying the
debt down and stop savings hmm I would do this I don’t know how you didn’t say
how much debt you have but yeah I would really concentrate on paying the debt
off I would put in as much I would maybe if you if you have this I might just say
like keep putting money into your thrift savings plan because you’re in the
military it’s a great plan don’t do other stuff but I would definitely just
max out your TSP and use all the rest of the money to pay down the debt that’s
what I would do and it’ll get done fast and then you can go back to some more
saving all right here’s Cody Cody wants to know what to do with the tax refund
you know the deal is like usually people just you know they get this tax refund
and he said we’re either gonna pay one of our credit cards or our car payment
what do you think I would pay whatever is a higher interest rate I’m very
boring like that I go highest to lowest some more income tax questions my father
passed away last year says Joel his brother’s sister and he became
beneficiaries of of a revocable trust that held us assets we’ve not taken any
distributions yet does the trust have to file a k1 showing each of us receiving
one-third of the trust income then each of us would pay tax on our individual
returns or should the trust pay the tax when we file the trust already has a
separate tax ID number legal accounting question who’s settling the estate why
are you not getting any advice on this the estate attorney should be providing
you advice go with that Matthew wants to know that he’s got a tax question he
goes I know I should have paid more attention to this but let’s see I had
six different jobs last year some employers didn’t take out federal taxes
from his paychecks is it normal well if your it depends what kind of
employee you are you know if you’re 10 90
ix employee your your employee the person who you’re employed by doesn’t
withhold taxes maybe this is because these are some small businesses I’m not
sure but now you now you know that if you receive a check and taxes are not
withheld you and your brain little brain clicks on and you say I’m just throw 20%
of that into checking savings for the tax bill that’s coming up that’s would
be that would be most prudent for you so give that a shot and let us know how it
goes okay you are listening to Jill on money and when we come back we’re gonna
blow through some more emails because they’re piling up marks really just
Hocking me now it’s crazy so all over me once that kidney stone passed he has new
fire vigor vim he did we don’t know that the kidney stone little Jill his kidney
stone may still be there she might be in small pieces for all we
know laying dormant waiting to wreak havoc
its Jill odd money hey send us a question that you may have it’s asked
Jill at Jill on money comm we’ll be right back do I invest here should I put my money
there Jill Schlesinger can help you back to Jill on money your back with Jill on
money if you’ve got a financial question a money question a career question shoot
us an email ask Jill at Jill on money.com you can also flag us from the
website leave a contact button right on the Jill on Money website Phyllis writes
that she is 59 and self-employed her house is valued at $300,000 she owes
eighty eight thousand dollars Oh for on a home equity loan she also owns an
office condo that’s valued at 250,000 and guess what no mortgage I don’t have
a retirement fund and only have forty five thousand dollars in an account I
presume she means in an emergency reserve account I owe just under ten
thousand dollars in credit cards $5,700 Carlie should I pay off my credit
cards and car lease or should I continue to contribute to an IRA or Roth IRA I
was also sued and lost from a chiropractic practice that I sold and
had to take out a loan for a hundred forty seven thousand dollars to pay the
chiropractor who purchased my practice and so there you have it okay so yeah of
the $45,000 what you’ve got 45 grand in in an account and you’ve got a lot of
equity in your house so there’s a few things that I think you should think
about number one is go ahead and pay off the credit card just boom done I don’t
know if you could pay off the car lease if you’re gonna keep the car but
otherwise I’m not sure why you’d pay it off I don’t think there’s much to be
gained so definitely paying off the credit card makes sense
and the office condo are you using it or not is that something you’re in
I’m not sure whether you are or not and if so then you can’t do much with it but
I’m just wondering you know if you’re not in that office and maybe you are I
just don’t know I might have I would like to free up some of this money
that’s sitting in your real estate I guess I would be interested in thinking
about perhaps selling the office condo but in terms of the very basic facts
that you lay out and you don’t mention how much money you make you my comment
is yes pay down the credit card sure you can go ahead and pay off the lease if
you are going to end up buying the car and buying the car out but it doesn’t
sound like you are so just keep paying that it seems like your house poor
you’ve got a lot of money tied up in real estate and so I also would want to
know the loan the cost of the loan that you took out the personal loan to pay
off the person who bought your practice I’m kind of I really need a little bit
more detail but in essence to the very basic question should you pay off the
credit card yes absolutely go ahead and pay off the credit card okay here is a
question who the J I’m just gonna say the name is J rights I’m curious to hear
Jill’s thoughts on the fire movement come on I’ve been talking about the fire
movement for every mark did you send her my column
okay Oh her name is Julia Julia marquel sent follow up with this sending you not
only this snippet but also the column there seems to be mixed opinions among
experts I’m interested in the concept more with regard to achieving financial
independence and the freedom to pursue a second career later
that’s not contingent on income I agree five all right fire financial
independence retire early that’s what it stands for I love it it’s basically
everything I love it’s saving money living smart to preserve options and it
doesn’t mean you have to retire if you want to find but it just gives
you tons of flexibility julia is 35 she lives on less than half of her income
nice I’m contributing the max to my 401k and Roth IRA I’m not married I don’t
plan to have kids there’s a good way to keep your expenses down I bought my
first home last year 30-year fixed rate mortgage four and a half percent I have
a six month emergency fund saved other than my mortgage I have no debt I still
have some extra money to save each month and I’m expecting an annual bonus this
spring with the goal of financial independence in mind what are your
thoughts on what I should do with the extra money my inclination is to focus
on paying off the mortgage early but experts it seems to advise against this
I’m not sure why my other thought is to invest in ETFs I am one of those people
who doesn’t love paying off a mortgage early and here is why Julia because when
you pay off the mortgage early you lose that flexibility that you so desperately
want to gain so I like the idea you can buy exchange-traded funds you can buy no
load no cost index funds you can do that at any of the big houses out there so
you know the ones that I always rattle off our Vanguard zero price TD
Ameritrade Charles Schwab fidelity you can do that you can go to an online
investment platform you can go to a betterment or Vanguard has these
personal advisory services that will allow you to not only just invest but
get some advice all these things are great ways to invest for the long-term
but have the flexibility of having the money around the problem that I see with
paying off that mortgage is you’re paying down a four and a half percent
note presumably you’re still getting a tax deduction associated with that you
just got the loan and and so the cost of the mortgage is probably more like four
maybe a little bit maybe three and three-quarters percent after you get
that tax deduction and I think that if you’re going to be investing for the
next say 15 years if you think that buyers on your her
isn’t at 50 or 55 you’re gonna hopefully make more than that so that’s what I
would do and I wish you the best of luck Julia and thank you so much for writing
don’t pay down the mortgage do save for yourself outside of a retirement plan
environment you’re listening to Jill on money and if you have a question if you
want to get more involved in the fire movement then just shoot us an email ask
Jill at Jill on money.com we’ll be right back you’re back with Jill on money live
from the policy genius studios if you’ve got a financial question send us a note
ask Jill at Jill on money.com let’s squeeze in another question before the
show ends Dave writes that he’s got a traditional pension and a portable
pension when he retires he says the portable will be a monthly payment but
it can also be a lump sum most of the guys take a lump sum on the portable but
you got to invest it right away to avoid being taxed where would you advise to
put the port okay so when you are anyone who’s got a pension
even an old retirement account you have to roll it over somewhere you would roll
it over into an IRA rollover account and that can be anywhere and you may take
this opportunity to start talking to a financial adviser financial planner one
hopefully that has your best interests at heart
you can basically find one of those by just going to let’s make a plan dot org
or naphtha and a PFA org and that will get you access to people who are bound
to adhere to the fiduciary duty so and yet you roll it over directly and you
don’t have to necessarily invest it all at once maybe for you it’s not going to
make sense I would think this is a good moment to just talk to somebody
Dave’s second question is that he was hurt on the job and he says if the
doctor doesn’t release me soon I could lose my position with a company I’m not
sure if I will able to continue to do that if I apply for disability and
get approved am i able to collect my pension and disability or do I lose my
pensions I don’t think you lose your pensions because of disability if
anything I think they accelerate what I might do is call your HR department or
if you are part of a union call the union representative and find out what
your options are it may be that in fact when many organizations if you become
disabled you then can take your your pensions you can take those benefits
early you can start a stream of income so all of this seems to me an important
component of that overall game plan I might seek some advice before I make big
decisions okay it has been wonderful it’s been a great
show if you would like to get in touch with us
intro week all you have to do is go to the website Jill on money.com
click on the contact us button we would be happy to help you out or just send us
an email ask Jill at Jill on money.com and check out all the stuff on the
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and of course buy the book won’t you the dumb thing smart people do with their
money ok we’ll see you next week thanks for listening

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