Money Girl

1023. Are you worried about the future cost of education for yourself or a child? Laura reviews ten ways a 529 savings plan supercharges education savings and can even be used for young students, non-traditional coursework, and professional career pivots.

Key takeaways
Contributions to a 529 plan get taxed upfront, but the account growth and withdrawals for qualified expenses are tax-free.
States sponsor 529 plans with various benefits and fees; however, you don’t have to be a state resident to participate in the plan.
There are no income restrictions to contribute to a 529, and owners typically name a child, who is the future student, as the account beneficiary.
Qualified 529 expenses include many costs associated with traditional college, but also include trade schools, vocational training, and professional certifications.
You can spend up to $20,000 per year on younger students from kindergarten through high school at public, private, or religious schools.
Leftover 529 funds can be rolled over into a beneficiary’s Roth IRA, with certain restrictions.

Upcoming Wedding Series Coming Up: We want your questions about wedding finances! Whether you're the bride, groom, or a guest, send us your questions about budgeting for the big day. Email: [email protected] or leave a voicemail: (302) 364-0308.

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1022. If you were expecting interest rates to drop, rising inflation is making it more likely for them to go up this year. Laura reviews six moves you shouldn’t overlook in a rising-rate environment to make your money work harder for you.

Key takeaways
When inflation rises, the Fed raises interest rates to slow down spending and demand, eventually causing prices to decrease so spending increases.
With sticky inflation and the expectation of rate hikes, borrowers need to watch interest rates on their debt, using a tool like my PFS.
When variable-rate debts, such as credit cards, increase, it’s wise to pay them off faster and reduce the interest expense.
If you’re considering a large purchase, like a home or vehicle, maintaining good credit and locking in a lower interest rate sooner rather than later are wise strategies.
Higher interest rates benefit savers, so using a high-yield savings account can maximize your earnings.

Upcoming Wedding Series Coming Up: We want your questions about wedding finances! Whether you're the bride, groom, or a guest, send us your questions about budgeting for the big day. Email: [email protected] or leave a voicemail: (302) 364-0308.

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Transcripts available at QuickandDirtyTips.com.
Email: [email protected] or leave a voicemail: (302) 364-0308.
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1021. Looking for a mortgage but are unsure what’s best for you? Laura answers a question from a listener who’s ready to buy a home but is overwhelmed by mortgage choices. Find out whether a fixed- or adjustable-rate loan, with or without mortgage points, is right for you.
Key Takeaways:
Fixed-rate mortgages are popular because they lock in a rate, providing financial stability no matter what happens in the economy.
Adjustable-rate mortgages (ARMs) can be good when interest rates are high, you don’t expect to own your home for the long term, or you can pay it off early.
Conventional loans are the most common type of mortgage because they’re backed by federal agencies, reducing risk for lenders.
Jumbo loans are high mortgage amounts that aren’t federally-backed and typically require stricter qualifying criteria by lenders.
There are various loans backed by the federal government, including FHA, VA, and USDA products, that come with lenient underwriting standards, making homeownership more affordable.
Buying mortgage points allows you to get a lower interest rate, which saves money if you own the property past the breakeven point.
Upcoming Wedding Series Coming Up: We want your questions about wedding finances! Whether you're the bride, groom, or a guest, send us your questions about budgeting for the big day. Email: [email protected] or leave a voicemail: (302) 364-0308.

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Transcripts available at QuickandDirtyTips.com.
Email: [email protected] or leave a voicemail: (302) 364-0308.
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1020. Using an AI tool or chatbot to improve your finances can be wise, depending on what you tell it. Laura reviews what you can safely ask a bot and what you should never enter in an AI tool. You’ll learn ten powerful AI prompts you can use to find hidden savings, negotiate your bills, and build more wealth.

Key takeaways
Since your data can be used without your knowledge, never enter personally identifiable information in an AI tool or chatbot, such as your Social Security number, account numbers, logins, or legal information.
Use AI to help with financial education and tasks like negotiating bills, building credit, and preparing for taxes.
AI can play devil’s advocate to explain the downside of a financial decision or list the pros and cons, improving your overall knowledge and logic.
Don’t assume the answer you get from a chatbot is correct–ask it to show its logic and resources so you can double check it.
For any significant financial decisions, it’s best to work with a financial professional for the best advice.
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1019. If you have enough home equity and not enough cash, you may wonder about taking a home equity line of credit (HELOC). Laura answers a listener’s question about whether taking a larger HELOC to pay for an expensive car repair and an upcoming wedding is a good or “horrible” idea.
Key Takeaways:
Most lenders require you to maintain at least 20% home equity after tapping it with a HELOC.
HELOC borrowers must also have enough income, a suitable debt-to-income ratio, and sufficient credit scores to qualify.
Getting a HELOC gives you more flexibility and lower interest rates than other financing options, such as a credit card.
If you use HELOC funds to buy, build, or remodel a home, interest paid on a limited amount of debt is tax-deductible.
Primary HELOC downsides include paying variable interest, reducing your home equity, and risking foreclosure if you’re unable to repay it.
Upcoming Wedding Series Coming Up: We want your questions about wedding finances! Whether you're the bride, groom, or a guest, send us your questions about budgeting for the big day. Email: [email protected] or leave a voicemail: (302) 364-0308.

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Transcripts available at QuickandDirtyTips.com.
Email: [email protected] or leave a voicemail: (302) 364-0308.

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