Matt and Joel are committed to providing practical, actionable advice about all things personal finance on their podcast How To Money – all while they enjoy a delicious craft beer, of course – so on this episode, they answer five questions from listeners about everything from long-term disability insurance to buying a car through Carvana to the benefits of HSAs when saving for retirement. Jen from Ohio wonders if it makes sense to use her credit card to pay her mortgage, in order to get the most out of her credit card perks. Matt and Joel do the math, and advise against: Jen might get a sweet 2% cashback on that big bill, but likely she’ll also be slapped with a 3-5% fee as well, totally negating those benefits.
Lindsay has a five-month-old son and wants to start saving money for his future. The guys love that, having advised listeners to start investing for their children early, and tell her about 529 plans specifically for saving for college – her home state has a highly-rated plan and a good tax incentive, but if she lived in a state that didn’t, she would be able to invest in better out-of-state plans. But they also point out that a Roth IRA might provide more flexibility; she can pull out contributions she’s made over the years with no tax penalties. So if her son gets a lot of scholarships, she can use the money to help him purchase his first car or put a down payment on a house. And saving for her own retirement is a wise financial decision, as well. They compare it to putting on your own oxygen mask before helping others: If she’s not ready for her own financial future, it puts the whole family in a precarious position.
Speaking of saving for retirement, another caller asks about rolling her traditional IRA into an HSA, or health savings account. She wonders if she should build a tidy nest egg in her IRA before transferring it, so she can save on the taxes later on in life. The guys applaud her creativity, but tell her that it doesn’t really work like that. However, HSAs are one of the best ways to save for retirement, and the important thing is to diversify your tax liabilities. There’s no way to know what taxes we’ll be paying a decade from now; tax brackets, as well as our income, fluctuate over the years. Pre-tax and post-tax funded vehicles allow a more clearly defined picture of our finances no matter what the tax law says. Get all this great information and much more on this episode of How To Money.
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