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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.
This week’s episode starts with a list of money tasks to do in the new year.
Then we pivot to this week’s money question from Benjamin, who left us this voicemail:
“Hello, Sean. This is Benjamin from Portland, Oregon. I am calling because I am trying to figure out what to do with my money. I have a mortgage on a $550,000 house. I have $236,000 left for a 20-year mortgage. I’m paying $2,000 a month and I’m splitting it with my partner.
We keep getting solicitations for mortgage insurance and I’m trying to figure out where I should put my extra income. I already have a Roth IRA. She does not. Our finances aren’t merged. I max out mine every year. I have about $20,000 in the bank, some stocks already.
I’m really trying to figure out the best bang for my buck. Should I pay off my mortgage sooner? Should I invest in life insurance or mortgage insurance? Should I invest in the market? Should we just go on more vacations?”
Check out this episode on any of these platforms:
Before you build a budget
NerdWallet breaks down your spending and shows you ways to save.
Our take on money tasks in the new year
January is as good a month as any to take stock of your finances and begin to make changes, if necessary. For those wanting to retool their budgets, perform a spending audit and look for expenses that can be reduced or eliminated. You might also want to take a look at your retirement accounts and increase your contributions. Even a 1% bump will make a difference over time, as NerdWallet’s retirement calculator demonstrates.
Reviewing your credit report is another money task that can really pay off. Access your report for free from annualcreditreport.com, then look for errors and unfamiliar accounts — these can be signs of fraud. Identifying fraud sooner rather than later gives the bad actors less time to rack up charges under your name and potentially damage your credit scores.
Other money matters include setting savings goals, reviewing your portfolio of credit cards and planning a vacation. You’ll have earned it after carefully managing your money throughout the year.
Our take on paying off a home early
For many of us, our mortgage is our biggest debt, so it’s understandable to want to pay off your home before the loan term expires. Doing so will free up money in your budget to spend elsewhere, and you’ll save money by paying less in interest. However, before you start an aggressive campaign to move your mortgage off the books, be aware of the potential drawbacks, too. Once your mortgage is paid off, you lose the mortgage interest deduction, if you itemize rather than take the standard deduction. And the extra money you put toward paying down the mortgage might be better spent in other ways, especially if your interest rate is low. Keep in mind that the average rate of return on the stock market is about 10%, and saving more for retirement and emergencies are higher priorities than paying off a mortgage.
Think about your priorities: There may be no one “right” thing to do with your money. Focus on what’s important to you and will give you the life you want.
Consider returns: If you have a low mortgage rate, you may get a better return on your money by investing than paying the mortgage off early.
Compare insurance products: Life insurance can be helpful if your death would hurt someone financially. On the other hand, mortgage insurance might be a good idea if you don’t qualify for life insurance.
More about paying off a home and financial tasks on NerdWallet:
Sean Pyles: So, you’ve got some extra cash coming in and don’t know what to do with it. Should you pay off your mortgage early or maybe just go on a few more vacations?
Liz Weston: Welcome to the NerdWallet Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I’m Liz Weston.
Sean Pyles: And I’m Sean Pyles. If you have a money question for the Nerds, call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. Or email [email protected] Also, this year we are talking with our listeners live on the podcast, so if you want to chat with us, let us know when you send us your money question.
Liz Weston: In this episode, we’re answering a listener’s question about whether they should pay off their mortgage early or put that extra money to some other use. But first, in our This Week in Your Money segment, Sean and I are giving you your money checklist for January.
Sean Pyles: And you don’t have to do all of the things we’re about to talk about, but it’s a good idea to commit to, I’d say, two or three. To start, I think it can be helpful to make a date to do all of this and just knock out your tasks. Otherwise, it can be easy to say, “Oh, I’ll get to it tomorrow, I’ll get to it tomorrow.” But if it’s the first thing on the calendar, you will do it. I think about it like, you know how sometimes you have a chair or a corner of your bedroom that gets filled with dirty laundry and …
Liz Weston: Or other stuff.
Sean Pyles: Yeah. Who knows what: magazines, books, old iPads, whatever. If you just spend a little bit of time clearing it out, it’s going to take you a little bit of effort, a little bit of thought, but you will be glad that it’s all cleared up. Think about this kind of like that.
Liz Weston: Yeah. I would suggest doing it during a weekday if you possibly can. Just because some of these tasks require businesses to be open or fully staffed or whatever, not always, but it can be really helpful if you are able to do that. To make it an afternoon where you’re not competing with the rest of the world trying to get things done.
Sean Pyles: Yeah. But then once you are done, I’d say, plan something fun. Maybe go out to dinner, meet up with a friend for happy hour. Reward yourself for it. We are all into rewards on this podcast, so make it so that you have something to enjoy after you put in this work.
Liz Weston: Yeah, I think that’s a great idea. And Sean, what are you suggesting is the No. 1 thing to do?
Sean Pyles: No. 1, I’m going to say, do a spending audit.
Liz Weston: OK.
Sean Pyles: We’ve been dealing with inflation over the past year. So I think folks should see what their personal inflation rate is, and that’s going to entail looking at your account statements for your primary accounts. That’s your checkings, your savings, your credit card accounts. I’d say go back three months. If you’re really ambitious, look back to last January. That can help you gauge how much more you’re spending on things like groceries or clothes from a year ago.
Liz Weston: Inflation rates are actually very personal. There’s the one that the general economy is experiencing, but how exposed you are to inflation just varies on what you spend your money on.
Sean Pyles: I would say my cream cheese inflation rate is out of control. I love cream cheese. I eat it multiple times a week and it’s ridiculously expensive now, but I’m not going to stop eating it. I’m just going to suck it up and not enjoy paying for it. But at least when I’m eating it, I’m happy that I’m having it.
Liz Weston: Yeah, exactly. But you’re going to cut back somewhere else so that you don’t wind up going in debt.
Sean Pyles: Yeah, absolutely. I’m not going to go in debt for my cream cheese. No cream cheese is that good.
Liz Weston: Good. That’s good to hear.
Sean Pyles: But if folks don’t want to dig into all of these accounts, budgeting apps can be a handy shortcut, especially if you’ve been using one for a while and it’s been tracking your spending over many months or years. It can help you see how much more you’re spending on things than a year ago.
Liz Weston: Yeah. And you actually have used one of these apps to make a change?
Sean Pyles: I have. Yeah. So I looked at my spending categories in one of these apps and in the past, I haven’t been a huge budgeting app person, but this is one area where I found it really beneficial. I saw that I was spending a lot of money in early 2022 on delivery. Food delivery in particular. So, I actually have largely cut that out of my budget because the fees and the added expenses that go into getting food delivered were simply not worth it for me. So now I’m just a takeout kind of guy.
Liz Weston: Yeah, that’s a really good change that you can make to get your spending in line with what your income is.
Sean Pyles: Yeah.
Liz Weston: Well, my big suggestion is take a look at your retirement accounts. We keep telling you not to do that because the market was really rough, and the totals were down. But actually, it’s a good idea to check at least once a year and some financial advisors will suggest bumping up the amount you contribute to your 401(k) or other retirement plan by 1% a year. Some plans will do this for you. You just have to sign up for automatic escalation. Others, you have to do it yourself. But January is a really good time to start contributing just a little bit more, and that really adds up over time. If you are contributing to a Roth or a traditional IRA and want to max that out, you should figure out how much you need to contribute monthly to get that done and maybe set up those transfers, as well.
Sean Pyles: Yeah. The next thing I’m going to recommend folks look at, if they don’t do it regularly, is their credit reports. You can access your credit report for free. We offer it at NerdWallet. Go through and see the different accounts that are listed. If there are any that you don’t recognize, that could be a sign of fraud. And also, errors are not uncommon in credit reports. If you find an error, you should dispute that.
Liz Weston: You really want to prioritize the serious errors, accounts that aren’t yours, or a payment being reported as late that was really on time. If you see old addresses there, that’s probably OK. If you see an address on your credit report you’ve never seen before, that you’ve never stayed at, that could be a sign of identity theft, as well. So, you do have to figure out what’s important and what’s not in terms of disputing errors. But if you aren’t sure, then err on the side of caution and report everything.
Sean Pyles: Yeah. I think sometimes when people consider whether or not to look at their credit report, they might think, “OK, why is this really important?” Obviously to find fraud, that’s a big one. But it can help you ensure that your credit report and your credit scores are on the right track for what you want them to do.
So, think about what you might want to use your credit for this year. Are you going to apply for a new credit card? Or maybe you need a personal loan or an auto loan. You can’t always predict when you will need to tap your credit, but the more work you put in now to make sure that your credit report is in good shape, the better rates you’ll be able to get later on.
Liz Weston: Yes. Also, credit is used in all kinds of different decisions. It’s used in setting insurance premiums. In most states, landlords use it, cell phone companies use it. So the better shape your credit is in, the more money that you’ll save.
It’s also a good time to either set up or retool your savings buckets. This is a saving strategy that we keep talking about where you set up different accounts for different purposes, and online banks make this super easy. There aren’t extra fees for setting up multiple accounts and you can name them whatever you want. It might sound complicated, but actually is super easy and you can also set up automatic deposits into these accounts to make sure that your goals are covered.
Sean Pyles: Yeah, I think folks should know how much they want to allocate into each of these accounts that they do have direct deposits set up. So I would say, refer to your audit from earlier and think about the way you had your deposits set up in 2022. Is that the right way for 2023, or do you want to put more into your vacation fund or your down payment for a house fund? Whatever it may be. Think about what you want to focus on savings-wise this year, and put more money into that.
Liz Weston: And speaking of inflation, a lot of insurance premiums are changing or have changed, or if you pay property taxes separately from your mortgage, those typically go up over time. So, you definitely need to take a look at those expenses at least once a year and make sure that you’re saving enough to cover them.
Sean Pyles: Mm-hmm. This is also a good time to make sure that you actually have the right savings account for your needs. If you found that the bank that you’ve been using for your savings hasn’t been giving you the best rates that are out there, then it might be a good time to find a different bank and make a jump. We actually have a new list of the best high-yield savings accounts of 2023 in NerdWallet’s Best-Of Awards. You can check that out at nerdwallet.com/podcast. We’ll have that in our show notes there.
Liz Weston: Another thing that I like to do every year is to review my credit cards. As you know, I keep a spreadsheet of all of them, including what the annual fee is and what the perks are and I want each individual card to be pulling its weight.
So, I take a look at our usage for the past year and make sure that these cards are at least paying for themselves in terms of the value I’m getting from the rewards. And that can change year to year. If it turns out that a card is not pulling its weight or that there’s a better offer out there, then January’s a great time to apply for a better deal.
Sean Pyles: Yeah. Also, if folks have credit card debt, I would say they should make a plan to pay it off this year. We’ve seen interest rates on credit cards go up. It can be really expensive to handle that one month to the next.
Liz Weston: Yes, exactly.
Sean Pyles: Finally, the last thing I’m going to say folks should look into is their vacations for the year. Plan out …
Liz Weston: Oh, the fun stuff.
Sean Pyles: Yeah, let’s get to something fun. We go from credit card debt to vacation. So, think about where you want to go over the coming 12 months and also how much you might want to spend on these trips. Flights can vary so much, but I typically like to book my flights about two months before the vacation I’m going to take. I tend to see the best rates that way, at least using Google Flights, which is my go-to.
Then also think about lodging as well. If you know you’re going to have a largeish group for your trip, Airbnb can be a good option, but you probably want to book as early as you can to get an early bird rate. Sometimes that can help for planning, because then you’ll just have a date on the books and you’ll have to commit to it.
Liz Weston: That’s a really good point. I tend to use hotels a lot more than I use Airbnbs. There’s where you can actually lock in a date, get a certain rate, and then if it drops, you can take advantage of it. You just cancel and rebook. As long as you don’t do a prepaid option, you typically have quite a while to cancel and rebook if you find a better deal.
Sean Pyles: Oh, that’s handy.
Liz Weston: And one other tip is if you are booking rewards flights, the earlier, the better, typically. There is some availability at the last minute oftentimes, but not always. So, if you are planning to use up some of those points and miles that you’ve accumulated over the last few years, this would be a great time to do it. And again, the earlier, the better.
Sean Pyles: All right, so listeners, you have your homework for the next month. I hope this helps you get a grip on your money in the new year.
Liz Weston: Yes.
Sean Pyles: Before we move on, I have a question for our listeners. I’m wondering what happiness means to you and how money fits into your idea of happiness or gets in the way of it. I’m working on a new series for the podcast about the psychology of money, and I want to hear from you for it. To share how you think about money and happiness, please leave me a voicemail on the Nerd hotline at 901-730-6373 or email a voice memo to [email protected] Thanks.
Liz Weston: All right. Now let’s move on to this episode’s money question segment.
Sean Pyles: Sounds good.
Liz Weston: This episode’s money question comes from Benjamin, who left us a voicemail. Here it is.
Benjamin: Hello, Sean. This is Benjamin from Portland, Oregon. I am calling because I am trying to figure out what to do with my money. I have a mortgage on a $550,000 house. I have $236,000 left for a 20-year mortgage. I’m paying $2,000 a month and I’m splitting it with my partner.
We keep getting solicitations for mortgage insurance and I’m trying to figure out where I should put my extra income. I already have a Roth IRA. She does not. Our finances aren’t merged. I max out mine every year. I have about $20,000 in the bank, some stocks already.
I’m really trying to figure out the best bang for my buck. Should I pay off my mortgage sooner? Should I invest in life insurance or mortgage insurance? Should I invest in the market? Should we just go on more vacations? All righty. Well, this is a long-winded question. Hope you have a good night. Bye.
Sean Pyles: To help us answer Benjamin’s question on this episode of the podcast, we are joined by mortgage Nerd Barbara Marquand. Welcome to Smart Money, Barb.
Barb Marquand: Thank you. I’m excited to be here.
Sean Pyles: We’re happy to have you. So, let’s start by talking about the crux of Benjamin’s question, which is how to determine financial priorities. I can start us off.
So, one thing that stands out to me is that Benjamin’s finances seem stable, which means that they have some flexibility with what they want to do with their money. I think that what gives them the most bang for their buck is really subjective. That could be a vacation or it could be investing because a bang for your buck doesn’t have to be a 7% return. It could be just making valuable memories. I think that’s super important and I think sometimes that can go overlooked or be undervalued in the long run.
So, to pin down their priorities, I would recommend Benjamin and their partner talk about what is most important to them right now, and what they’ll value most in the future.
Barb Marquand: Yeah, I really agree. I think it’s a great idea to pause when you find yourself in this situation. For one thing, it’s just good to acknowledge the stable position you find yourself in. That’s something to really appreciate and take in. For another, it’s good to give yourself some space to step back and think. Like you said, flexibility naturally creates more choices, which is a great thing, but it can also be a little overwhelming.
So first, if you can think through your financial goals, what’s really important to you. Then you can start looking at the various options and then make decisions aligned with those priorities.
Liz Weston: Now, Benjamin specifically asked about paying off their mortgage early. What are some of the pros and cons of doing that?
Barb Marquand: Well, freedom from a mortgage payment certainly sounds ideal. When you’re in the middle of paying for a mortgage, it can sound like a dream. But the benefits are fairly obvious: Once your mortgage is paid off, you’ll have less debt. So there’s more cash available to spend on other things every month. The other advantage is, you’ll save money on interest over the life of the loan.
Finally, a big driver for a lot of homeowners is just a psychological benefit, a sense of freedom that comes from eliminating that big debt. Many retirees, for instance, want to start their post-work life without the burden of a mortgage payment. So if you’re close to retirement, that may be a consideration.
Sean Pyles: Yeah, there are some downsides to paying off your mortgage early though. Can you talk through those?
Barb Marquand: One is that after the mortgage is paid off, you lose the mortgage interest deduction on your taxes if you itemize. Now that’s not going to be the biggest consideration in this, but it’s something to keep in mind.
The other two downsides are weightier. One is if you have a low fixed mortgage rate, you may get a higher return by investing, especially in tax-advantaged accounts. The other is that there are just important priorities to tackle first, such as saving for retirement and saving for emergencies. So before paying off the mortgage early, make sure you’re fully contributing to your retirement accounts up to the maximum limits and make sure you have a healthy savings account for emergencies. The target for that would be maybe the equivalent of say, six months worth of expenses.
Liz Weston: Barb, this just occurred to me, but you mentioned retirees and there’s a really significant danger if you’re coming up on retirement of taking a big wad of cash and dropping it to pay off your mortgage because then you are the classic house rich and cash poor. You might not have as much flexibility in your finances if you do that.
Barb Marquand: Absolutely.
Sean Pyles: Liz, I have a question for you. From a credit scoring perspective, what would be a potential downside of paying off your mortgage? Could that make them take a hit because they’re not paying off this loan anymore?
Liz Weston: Potentially, when you pay off a mortgage, an installment loan, that could cause your scores to drop. Kind of depends on what else is in your file, which particular score you’re looking at, because there’s many, many different scores. But I would say, if you are actively using your credit cards and using those responsibly, you’ll still have good enough scores. You don’t really have to worry about falling off the face of the credit scoring cliff if you do that.
Sean Pyles: That shouldn’t be why you don’t pay off your mortgage early.
Liz Weston: Exactly. And to piggyback on the itemized deductions, very, very few of us are itemizing anymore. I mean, it’s below 10% of taxpayers. So even if you did get some sort of tax benefit from your mortgage early on, you’re probably not getting it now. So before you wait to pay it off because of tax reasons, go talk to a tax pro or just look at your last tax return and see if you were even able to itemize.
Sean Pyles: That kind of felt like a bait and switch for me when I became a homeowner. I heard promises, “Oh, you can write off all of the interest that you’re paying on your mortgage.” That’s not really the case if you’re not itemizing, which for me, doesn’t make sense to do.
Barb Marquand: Yeah.
Liz Weston: Exactly.
Sean Pyles: All right. Well, Benjamin is also asking about different types of insurance. Barb, I know you used to write about insurance for a while at NerdWallet. So can you talk about what types of mortgage insurance offers they might be receiving, and who might be a good candidate for them?
Barb Marquand: Sure. I imagine that what they’re getting offers for is for something called mortgage protection insurance or sometimes it’s called mortgage life insurance or mortgage protection life insurance. I want to jump in here though and say that this shouldn’t be confused with private mortgage insurance, or PMI.
You might remember that from when you applied for a mortgage if you got a conventional mortgage with a down payment under 20%. That’s when you’re required to pay for private mortgage insurance, which protects the lender, not you, in case you default on a loan. So what we’re really talking about though is mortgage life insurance that protects the homeowner.
Sean Pyles: Yeah, unfortunately I am keenly aware of PMI because I’m paying it every month. But let’s talk about the other form of mortgage life insurance or those other various policies. What do they typically cover?
Barb Marquand: These policies vary depending on the company, but generally they’re designed to pay off your mortgage balance if you die. Typically, the death benefit, which is the payout when you die, goes directly to the lender to pay off the balance. Some policies also will pay the mortgage for a certain period if you become disabled or lose your job. But like I said, the policies vary so if you’re looking at these offers, you really have to read the fine print to understand how they work.
Sean Pyles: Do you have an idea of how much they might cost monthly?
Barb Marquand: Well, it will depend on your mortgage balance and also you’ll want to really compare the costs of these with term life insurance. Generally, a term life insurance policy would probably be cheaper per $100,000 of coverage than a mortgage life insurance policy.
Liz Weston: Well, and it’s also more flexible because you can use the money in different ways. Term life insurance pays out to the beneficiaries, it doesn’t pay out to a mortgage company, for example.
Barb Marquand: And for that reason, term life insurance may be a better option for a lot of folks rather than a mortgage life insurance policy that pays the lender directly because of that flexibility.
Sean Pyles: Mm-hmm. Who do you think one of these policies would be good for?
Barb Marquand: One advantage to these mortgage life insurance policies is there’s usually no medical exam required like there is for a lot of other life insurance policies. So, if somebody has a health condition and they might otherwise not be able to qualify for life insurance, this might be an option for them. So at least their family would be protected if they died and at least the mortgage would then be paid off.
Sean Pyles: Well, now let’s talk a little more about life insurance. What do you think Benjamin and their partner should consider if they’re shopping around for that?
Barb Marquand: Well, not everybody needs life insurance, but a lot of people do. The way to tell if you need life insurance is to ask yourself if your death would put someone in a financial bind, then it’s a good idea to have life insurance. That’s why it’s important for parents with dependent children to have life insurance. If an insured parent dies, the family can use the death benefit to pay for housing, daily expenses, education, whatever they need.
But parents aren’t the only ones that need coverage. To understand if you need life insurance, you just have to think through a worst-case scenario, which is basically, “What would happen if I died tomorrow?” So then you think about, “Well, would my partner be able to afford the mortgage, utilities and home maintenance?” Then you also want to ask yourself, “What would happen if my partner died?” It may make sense for each partner then to have term life insurance with the other partner named as a beneficiary.
Sean Pyles: Well, now I want to ask both of you, if you were in Benjamin’s situation, what would you do with your money?
Barb Marquand: Well, I can jump in and talk about what I did as a homeowner in two different situations. With the first house we owned, we did not put extra money toward paying off the mortgage early, mainly because we just really didn’t have that much extra money. We had plenty on our plate just with saving for retirement, emergencies, saving for our daughter’s college education, paying bills, et cetera, et cetera. But then after we sold that house and bought another house, we were in a stronger position. At that point, we were able to fully fund our retirement. We had pretty healthy savings. We did put extra money toward the mortgage and we were able to pay it off several years early. It did feel really good when we did.
Would we have been better off if we had invested that money? It could be that we would have, maybe. But we could see my husband’s retirement on the horizon and wanted freedom from a mortgage when he transitioned to contract work from a full-time job. So, for us, it was really worth it. It just gave us a sense of freedom and peace of mind and it felt like a real accomplishment once we got there.
Liz Weston: Did you have an actual mortgage burning party?
Barb Marquand: You know, we didn’t. I kind of wish we would have. It’s such a great finish line that you wish you could do something to mark it, but we’ve enjoyed each month since then.
Sean Pyles: So, I’ve never heard of a mortgage burning party. Liz, please describe what that is. It seems pretty self-explanatory …
Barb Marquand: Oh, oh, wow.
Sean Pyles: … but I need some details.
Liz Weston: Yeah, no, this is so old school, but it used to be that you would pay your mortgage off over 30 years. Refinancing wasn’t as big of a thing. When you got to the 30-year period, you would get the literal, I don’t know that it was a deed, but you would get some piece of paper. You’d invite your friends over and you’d have a mortgage burning party to just be done with that. But yeah, I don’t think I’ve ever been to one. I don’t know that they still exist. I just thought that was …
Sean Pyles: That sounds fun.
Liz Weston: Yeah.
Sean Pyles: I’m trying to think about what would be the equivalent for the digital age. Do you get everyone around while you close out of the DocuSign window on your browser or something?
Liz Weston: Probably.
Barb Marquand: There you go.
Sean Pyles: I like the ceremony to mark that you’ve paid off your mortgage.
Liz Weston: Yeah, because it really is a big deal. I mean, we’ve always had incredibly cheap mortgage interest rates. We’ve been really lucky. To me, it’s really hard to pay it down any faster than I absolutely have to. But I totally get that being mortgage-free in retirement is where you want to be. That would give you so much more freedom. Not having any debt would give you a lot of freedom when you get to retirement.
Sean Pyles: There’s something to be said about making the financial decision that helps you sleep best at night. If that’s paying off your mortgage, then that’s absolutely worth it.
Liz Weston: As long as you’re also saving for retirement. What made me a little bit nervous about Benjamin is, I didn’t see a lot of retirement savings going on. So, I don’t know if there’s a 401(k) that’s being neglected. If they’re getting a match, if they’re not getting a match.
To me, I’ve always been flat-out doing the most I can to save for retirement and then occasionally made a few extra payments on mortgages here and there, but it definitely wasn’t a top priority. I understand that people have lots of different reasons and lots of different priorities. I would just try to nudge retirement savings up towards the top because it’s going to be expensive. It’s going to last longer than you think and it’s going to take more money than you think to get there.
Sean Pyles: Well, Benjamin mentioned that they have a Roth IRA, but that their partner doesn’t. And it seems like Benjamin is maxing out their Roth. So maybe this would be a good time for Benjamin to sit down with their partner and say, “Hey, let’s open up that Roth for you,” and then up retirement contributions through that.
Liz Weston: And look for jobs that have 401(k)s.
Sean Pyles: Yeah.
Liz Weston: Since those are really important.
Sean Pyles: If I was in this situation, I would probably try to have a little bit of everything, which is the way I like to live my life. So, I would maybe pay a little bit extra on my mortgage principal each month to ideally add an extra month’s payment by the end of the year. So basically, I have 13 months of payments in 12 months. In Benjamin’s case, that would be an additional, like roughly, $167 a month, which isn’t nothing, but it’s not a huge amount of money. Then I would also, for sure, beef up my vacation fund because I want to have more fun memories with my partner in the new year and that’s really an important thing to me.
Liz Weston: Absolutely.
Sean Pyles: Well Barb, thank you so much for talking with us today.
Barb Marquand: Well, thank you. It was fun.
Sean Pyles: With that, let’s get on to our takeaway tips. Liz, will you please start us off?
Liz Weston: Absolutely. First, think about your priorities. There may be no one right thing to do with your money. Focus on what’s important to you and will give you the life you want.
Sean Pyles: Next up, consider returns. If you have a low mortgage rate, you may get a better return on your money by investing than paying off the mortgage early.
Liz Weston: Finally, compare insurance products. Life insurance can be helpful if your death would hurt someone financially. On the other hand, mortgage insurance might be a good idea if you don’t qualify for life insurance.
Sean Pyles: And that is all we have for this episode. If you have a money question of your own, turn to the Nerds and call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. You can also email us your questions at [email protected] Visit nerdwallet.com/podcast for more info on this episode. And as always, remember to follow, rate, and review us wherever you’re getting this podcast.
Liz Weston: And here’s our brief disclaimer. We are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
This episode was produced by Sean Pyles and myself. Kaely Monahan edited our audio. Jae Bratton wrote our show notes. And a big thank you to the wonderful people on the NerdWallet copy desk for all their help.
Sean Pyles: And with that said, until next time, turn to the Nerds.