What to Do With Extra Money

What to Do With Extra Money


welcome to the Jill on money call of the
week we are presented by Marcus by Goldman Sachs if you’d like to get on
the air with us and ask us any financial issue that is bothering you or maybe
it’s not bothering you on a second opinion maybe you need me and Mark to be
like your marriage counselors and try to make sure that we get you guys on the
same page maybe you’re just a singleton and you would like just generalize
financial advice let us know ask Jill at Jill on money.com ask Jill at Jill on
money.com that’s what Mike did he is calling from
Illinois hello Mike how can I help you out hello Jill first thanks for having
me on my wife and I have what I would consider to be in excess of our bank
accounts that aren’t earning much interest and I’m wondering what your
thoughts are on what we should do with it in terms of paying down some debt
paying down our mortgage or investing investable assets
okay great Mike how old are you 37 how old is she
36 kids no okay how much money in excess of an emergency reserve fund so do you
have six months of expenses would be like the minimum I would want you to
keep safe how much more than the six months of expenses do you have in the
bank more than six months about $30,000 okay got it great okay now tell me what
else is going on you both work yes okay and are you both contributing to your
retirement accounts so yes and for her no for me she has a form of K 5%
contributions with 3% matching and 2% profit sharing there’s about 15 five and
there I started a business or a partnership I don’t have any self
retirement funds but we do have other retirement savings qualify are raised
and rolled over previous are raised from 401ks those are about three hundred and
forty five thousand okay great perfect and are you contributing to a Roth IRA
now just even though you don’t have a retirement account through your new
venture D are you still putting the money into a Roth right now yes we’re
we funding our Roth IRA each year great perfect fantastic okay so tell me about
what else is going on what’s outstanding in terms of debt okay one other asset we
do about fifteen thousand in taxable assets and so in thirds debt
oh wait wait let’s go back to that what assets are taxable what it’s in their
mutual funds and stocks are they all carrying capital gains one is one stock
that’s carrying capital gains if I sold everything right now do you think you’d
have a tax loss or a tax gain in the whole account it would be a tax loss I
love that okay I’m sorry no one likes that they’re bite ears
prick up woo I love a loss okay now so you got 30
grand extra in cash and 15 grand that I’m going to lay my hands on I know it
tell me what the debt is that we have to think okay mortgage 125,000 at 4% credit
cards not much the various we pay him off each month about 15 dollars a month
so we round up there yeah cars we both have car loans both at 0% interest
versus at 45,000 – at 2075 that would hurt though her travel expenses
reimbursement is almost exactly what her car payment is us all and then the only
other debt is her student loan which is 42,000 consolidated at 6.6 percent the
monthly payment is $320 okay I love that you made it easy for me because it’s so
delightful when the math just works blood here that okay ready
the 30 grand plus the 15 in the taxable mutual funds that is going to pay off
her student loan debt you’re done that’s it that’s it because you got 30 grand
extra sitting in cash earning nothing you got taxable mutual funds grab that
tax loss keep it how much do you figure the loss is more than more than three
thousand dollars this year right around 2000 I bet great okay take the 30 sell
the 15 grand and the taxable mutual funds wipe that out done you’ll be able
to write off up to three thousand dollars of losses against
ordinary income this year so that’s great pay off the student loans you’re
done be done with it right now and the reason is six point six is a real number
it is hard to make a six point six percent guaranteed return you are so
lucky not lucky I should say you’ve worked hard enough and you’ve put this
money aside just get rid of the debt now the thing is now you go have this three
hundred and something dollars a month extra right so there’s two choices you
know you don’t have kids you don’t to save for college but you may want to
beef up some of your non retirement savings if I were you I would take that
three hundred dollars and have her put more into her 401k at work so I would
have her instead of be at five percent plus the three percent match plus the
two percent profit sharing I would have her bump up to say ten percent what does
she earn right now about a hundred and eight hundred and ten perfect she should
go up to ten percent from five percent and then your three hundred something
dollars will go directly into the 401k you’ll be putting money into your into
her 401k to Roth’s funded get rid of the student loan debt that you know and you
mister get this business going so we can put in a big fat retirement plan for you
okay that seems that seems fair I love what your what your cell until can I see
one more question why not a little bit of wrinkle here now just the psychology
behind the student loan it her she feels like she wants to take on herself that
it’s her burdens not mine I’m trying to overcome that with her because I want it
I want to get rid of it as much as possible so I need advice on that ready
what is her name Katie Katie yeah okay Marc cut this up
separately and send this so we can play this directly for Katie okay hi Katie
it’s Jill Schlesinger and I am a certified financial planner I’m the host
of Jill on money and your lovely groom Mike called me and asked me about this
student loan debt that you’re carrying and well I think it is laudable that you
consider this your debt I am here to tell you that the smartest thing to do
would be to take some of your joint assets and pay down this debt and you
know what you’re gonna make it up to Mike because you’re gonna use the money
you were putting towards student loans to beef up your retirement and he is
going to be one of the Sherri’s of that so please don’t stand
on some weird principle you’re married you have a great relationship you’re
gonna share this and it’s time to get rid of this debt get out from under it
just listen to aunt Jill it will be okay use the money and move
on let’s get to your next financial objective we think this is the
breakthrough I’ve been waiting for all right and she and she’s energy wavers
say I’m gonna make you get on the phone with Aunt Jill okay all right okay I
will do that and Jill tough love of Rancho it’s not even tough love it’s
love it’s just total love all right okay good luck
great thank you so much you I really appreciate you take care bye bye okay
that’s the call of the week if you have a financial question just give us a
holler send an email to ask Jill at Jill on money.com
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show is presented by Marcus by Goldman Sachs see you next week you

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