Money Girl

1024. Are you ready to quit working or to begin a financially independent lifestyle? Laura covers four ways to access your retirement funds without paying a hefty 10% early withdrawal penalty before 59.5.

Key takeaways
Using a tax-advantaged retirement account has many benefits, but one downside is typically paying a 10% penalty for withdrawals before age 59.5.
The rule of 55 is an IRS rule that allows employees to take penalty-free retirement plan distributions when they leave during or after the calendar year of their 55th birthday.
With a Roth IRA, you can withdraw your original contributions at any age, for any reason, entirely tax- and penalty-free.
A SEPP or 72(t) payment plan is an IRS rule that allows you to take equal distributions from a retirement account penalty-free, no matter your age, if you follow strict guidelines.
A brokerage account allows you to take distributions penalty-free, no matter your age, but doesn’t offer the tax perks of a retirement account.

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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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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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Email: [email protected] or leave a voicemail: (302) 364-0308.
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