It’s been a pretty good year so far for mortgage rates, which topped out at around 8% last year.
The 30-year fixed is now priced about one full percentage point below its year ago levels, per Freddie Mac.
And when you consider the high of 7.79% seen in October 2023, is now over 150 basis points lower.
But the recent mortgage rate rally may still have some gas in the tank, especially with how disjointed the mortgage market got in recent years.
Simply getting spreads back to normal could result in another 50 basis points (.50%) or more of relief for mortgage rates going forward.
Forget the Fed, Focus on Spreads
There are a couple of reasons mortgage rates have improved over the past 11 months or so.
For one, 10-year treasury yields have drifted lower thanks to a cooler economy, which is a boost for bonds.
When demand for bonds increases, their price goes up and their yield (interest rate) goes down.
Long-term mortgage rates follow the direction of the 10-year yield because they have similar maturities (mortgages are often prepaid in a decade).
So if you want to track mortgage rates, the 10-year yield is a good place to start.
Anyway, inflation has cooled significantly in recent months thanks to monetary tightening from the Fed.
They raised rates 11 times since early 2022, which seemed to finally do the trick.
This pushed the 10-year yield down from nearly 5% in late October to about 3.65% today. That alone could explain a good chunk of the mortgage rate improvement seen since then.
But there has also been some narrowing of the “spread,” which is the premium MBS investors demand for the risk associated with a home loan vs. a government bond.
Remember, mortgages can fall into default or be prepaid at any time, whereas government bonds are a sure thing.
So consumers pay a premium for a mortgage relative to what that bond might be trading at. Typically, this spread is around 170 basis points above the 10-year yield.
In other words, if the 10-year is 4%, a 30-year fixed might be offered at around 5.75%. Lately, mortgage rate spreads have widened due to increased volatility and uncertainty.
In fact, the spread between the 10-year and 30-year fixed nearly doubled from its longer-term norm, meaning homeowners were stuck with a rate 3%+ higher.
For example, when the 10-year was around 5%, a 30-year fixed was priced around 8%.
Normalizing Spreads Could Drop Rates Another 60 Basis Points
New commentary from J.P. Morgan Economic Research argues that “primary mortgage rates could fall by as much as 60 bps over the next year” thanks to spread normalization alone.
And even more than that if the market prices in more Fed rate cuts.
They note that the primary/secondary spread — what a homeowner pays vs. the secondary mortgage rate (what mortgage-backed securities trade for on the secondary market) remains wide.
Head of Agency MBS Research at J.P. Morgan Nick Maciunas said if the yield curve re-steepens and volatility falls, mortgage rates could ease another 20 bps (0.20%).
In addition, if prepayment risk and duration adjustment fall back in line with their norms, spreads could compress another 20 to 30 bps.
Taken together, Maciunas says mortgage rates could improve another 60 basis points (0.60%).
If we consider the 30-year fixed was hovering around 6.35% when that research was released, the 30-year might fall to 5.75%.
But wait, there’s more. Aside from the mortgage market simply rebalancing itself, additional Fed rate cuts (due to a continued economic slowdown) could push rates even lower.
How Much Will the Fed Actually Cut Over the Next Year?
Remember, the Fed doesn’t set mortgage rates, but it does take cues from economic data.
At last glance, the CME FedWatch tool has the fed funds rate hitting a range of 2.75% to 3.00% by September 2025.
That’s 250 bps below current levels, of which some is “priced in” and some is not. There’s still a chance the Fed doesn’t cut that much.
However, if it becomes more apparent that rates are in fact too high and going to drop to those levels, the 10-year yield should continue to fall.
When we combine a lower 10-year yield with tighter spreads, we could see a 30-year fixed in the low 5s or even high 4s next year.
After all, if the 10-year yield slips to around 3% and the spreads return closer to their norm, if even a bit higher, you start to see a 30-year fixed dip below 5%.
Those who pay discount points at those levels might have the chance to go even lower, perhaps mid-to-low 4s and maybe, just maybe, something in the high 3s depending on loan scenario.
Just note this is all hypothetical and subject to change at any given time. Similar to the ride up for mortgage rates, there will be hiccups and unexpected twists and turns along the way.
And remember that lower mortgage rates don’t necessarily imply another housing boom, assuming higher unemployment offsets purchasing power and/or increases supply.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Do you want to learn how to make money baking? Baking can be more than just a fun hobby; it can also be a great way to make extra money from home. From selling dog treats and cakes to starting a YouTube channel for baking tips, there are many ways to turn your passion into…
Do you want to learn how to make money baking?
Baking can be more than just a fun hobby; it can also be a great way to make extra money from home. From selling dog treats and cakes to starting a YouTube channel for baking tips, there are many ways to turn your passion into profit. By exploring these opportunities, you can find a side hustle or a small business idea that fits your lifestyle and interests.
Whether you enjoy creating sweet treats or savory goodies, there’s a market for your baked goods. You don’t have to be a professional chef to make money baking; with some creativity and effort, you can start earning and sharing your delicious creations with others.
Best Ways To Make Money Baking
Below are the best ways to make money baking.
1. Sell dog treats
Selling dog treats is a fun way to make money. If you love dogs and baking, this is a perfect match. You can make treats from home and sell them online, at local markets, or even work at a dog treat bakery.
I have bought many dog treats over the years, and I think it’s a wonderful business and baking side hustle!
You can start by finding easy recipes, such as this free peanut butter dog treat recipe. You’ll want to use ingredients safe for dogs like peanut butter, pumpkin, and oats (don’t forget to label the ingredients in case some dogs have allergies), and you can find many recipes online that are easy to follow.
Packaging is important too when it comes to dog treats. You may want to use cute bags or boxes to make your treats look special.
To get customers, you can advertise your treats on social media, such as by posting pictures and videos of your baking process.
You can learn more about this topic at How I Make Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!). Plus, you can sign up for this free training workshop that will teach you how to start your own side hustle baking and selling dog treats.
10
This free workshop will teach you how to start your own dog treat bakery business.
2. Sell custom cakes
Selling custom cakes is a fun way to make money from home. People love ordering unique cakes for birthdays, weddings, and other special events. You can decorate cakes with different designs, colors, and themes to match any occasion.
To learn how to make custom cakes, you can start practicing your cake decorating skills by watching tutorials online or taking a class in person (there’s probably a company near you that teaches this skill!).
The better your cakes look, the more customers you’ll attract, so learning through trial and error and/or with tutorials and classes will go a long way.
To get customers, you can start social media accounts (I’ve seen several custom cake accounts on TikTok and Instagram, for example), and post in local Facebook groups (such as wedding groups or parent groups).
You can learn more about this at How To Make Extra Money By Starting A Home Bakery.
3. Host baking workshops
Hosting baking workshops can be a fun way to make money baking. You can invite people to your home or rent a small space. Teach them how to make cakes, cookies, or whatever you love to bake. They will pay to learn from you.
You can sell workshops for beginner or experienced bakers, and make your classes based on what people want to learn. You could even focus on themes like holiday baking or gluten-free recipes. This way, you can get more students interested.
You can share your workshops on social media and tell your friends to spread the word. You can also make flyers and put them in local stores or cafes (make sure to add pictures of your tasty baked goods to grab people’s attention).
Another idea is to host online workshops on sites like Skillshare and Udemy. This way, you can reach even more people who want to learn from the comfort of their own homes. Use video calls to teach and send out ingredient lists beforehand. You can even record the classes so participants can rewatch them later.
4. Start a baking blog
Starting a baking blog can be a fun way to share your passion for baking and make money at the same time.
With a blog, you can post recipes, share baking tips, and talk about your favorite tools and ingredients. This gives you a platform to connect with others who enjoy what you create (and recipes that they can recreate).
To begin, you’ll need to choose a niche (you can go wide or very specific – up to you). For example, you could focus on gluten-free baking, cake decorating, family meals, healthy meals, budget meal ideas, or bread recipes.
Once your blog is up and running, you can monetize it through affiliate marketing, ads, sponsored posts, and even selling your own products like ebooks or online courses.
Building a blog takes time and effort, but it can be a rewarding way to turn your baking passion into a steady income stream.
You can start a blog by using my free How To Start a Blog course.
You can learn more about this at How I Make $110,000 A Year As A Food Blogger.
5. Become a food photographer
You can make money from home by working as a freelance food photographer. This means taking pictures of food for things like blogs, magazines, and ads.
Bloggers often hire photographers to make and photograph recipes for their blogs, using professional photos to make their posts look great.
Some food photographers earn $50,000 a year, and some even make over $100,000 working with bloggers.
You can learn more about this at How To Become a Food Blog Photographer And Earn Over $50,000 Each Year.
6. Partner with local cafes and coffee shops
Partnering with local cafes can be a great way to make money with your baking. Cafes look for fresh, homemade treats to sell to their customers, and many times the treats are made by local bakers.
I have a friend who does this as her full-time business – she has a home bakery business and she makes the most delicious treats. She sells them on her website, but also to local restaurants near where she lives.
You can start by visiting local cafes and talking to the owners. Bring samples of your best baked goods. This way, they can taste your work and see the quality for themselves.
Once you have a few interested cafes, you can set up a supply schedule. Decide how often you’ll deliver baked goods and how much you’ll charge. Make sure to keep track of orders and deliveries to avoid mistakes.
Building a good relationship with cafe owners is important, so you will want to be reliable and deliver on time. Happy cafe owners are more likely to keep ordering from you and might even recommend you to other businesses.
7. Start a YouTube baking channel
Creating a YouTube baking channel is an exciting way to share your passion for baking while making money.
I have watched many baking YouTube videos over the years so that I can learn how to make a recipe. Many people just love baking shows too!
With video content, you can teach others how to bake, demonstrate fun recipes, and build a community of baking enthusiasts who love your style.
You can start by choosing a specific niche for your channel – whether it’s cake decorating, gluten-free baking, or quick and easy desserts. This helps attract viewers who are interested in exactly what you have to offer.
High-quality videos are key, so invest in good lighting and a decent camera, but don’t stress – you don’t need to be a pro to get started. Many popular baking channels started with basic equipment like their cell phone and grew over time.
8. Create an Instagram baking account
I have a friend who has a baking side hustle where she shares the recipes she’s made on her Instagram. Her recipes always look so good too!
Starting an Instagram baking account can help you make money from your baking skills through sponsored partnerships, affiliate marketing, and even by selling baked goods.
Instagram is perfect for visual content, so your beautifully decorated cakes, cookies, and pastries can really shine. Plus, it’s a great platform to connect with potential customers and others who love to bake.
9. Sell baked goods at farmers markets
Selling baked goods at farmers markets is a great way to make money. You can meet your customers face-to-face, which helps build a loyal customer base.
You can start by finding a local farmers market. You’ll need to know the rules and fees, which can usually be found on their website. Some markets may have special requirements for food sellers.
You could sell baked goods like cookies, muffins, bread, pies, and more.
There’s a small farmers market near where I live, and I try to go at least once a month to specifically buy bread from a home bakery that I love. They also sell dips and different kinds of butter for the bread too.
10. Sell baking ebooks
Selling baking ebooks is a great way to make money from your baking skills. With ebooks, you can share your favorite recipes and tips with a wide audience.
Creating an ebook takes some time. You’ll need to write down your recipes, take photos, and maybe even make some videos. Once it’s ready, you can sell it online.
Amazon Kindle Direct Publishing is a popular platform where you can sell your ebook. It’s easy to use, and many people have had success with it.
Another option is to sell your ebook on your own website. This way, you keep more of the money from each sale. You can also create a blog to attract readers who might be interested in your ebook.
Even though it takes some work to create an ebook, it can be a good source of income. Once it’s done, you can keep selling it without much extra effort.
I have personally bought several books with recipes from “normal” people like you and me. They are personally my favorite ways to get new recipes. In fact, one of the things I like to do on my travels is buy a cooking book from a local author so that I can recreate local meals when I’m at home!
Getting Started With a Baking Business
Now that we have gone over 10 different ways to make money baking, I also wanted to talk about how you can get started with a new baking business.
When starting a baking business, you need to find your unique style, make your kitchen ready for baking, and get the equipment you need. These steps will help you turn your love for baking into a way to actually make money.
Note: The below won’t be everything that you need to do (or it may not be applicable to the bakery business idea that you are wanting), but it is a good start.
1. Finding your niche
Finding your baking niche means deciding what type of baked goods you want to specialize in. You could focus on cupcakes, bread, cookies, or even custom cakes for special events. Think about what you love to bake and what you’re best at.
If you enjoy making gluten-free or vegan desserts, that could be your niche. Selling something unique will make your business stand out, and it will also attract customers looking for specific types of baked goods.
2. Setting up your kitchen
The equipment you need will depend on what you plan on selling. But, overall, here are some tips to get started.
Clean your kitchen thoroughly to meet health standards.
Dedicate a section of your kitchen for baking supplies. This includes ingredients, baking pans, and mixing bowls. Labeling the shelves can help you quickly find what you need. If you’re limited on space, consider adding shelves or storage bins.
You may also need cooling racks, spatulas, and piping bags for decorating your baked goods.
Invest in quality items that will last. If new equipment costs too much, consider buying secondhand items in good condition.
Extra things like display cases and packaging materials are important. They help you present your baked goods attractively to customers. Good packaging also keeps your baked items fresh during delivery or pickup.
3. Marketing your baked goods
Marketing your bakery business can go a long way and help you to make more money.
Your brand is your bakery’s personality so I recommend that you make a catchy name and logo. Think of colors and fonts that match the feel of your baked goods.
Social media can help you reach many people fast too. Start with platforms like Instagram and Facebook, and post pictures of your baked goods.
4. Managing finances
When you run a baking business, handling your money well is key. You must price your products right, keep track of your expenses, and understand tax rules.
To make a profit, you need to set your prices carefully. Start by figuring out the cost of ingredients, packaging, and any special tools. Then, add in your labor costs.
A simple way to price is to use this formula:
(Cost of Ingredients + Labor + Overhead) x Markup = Sale Price
For example, if it costs $5 to make a baked good and you want a 50% profit, your markup might be 2x. So, the baked good should be $10.
5. Legal things to think about
There are some legal things that you will want to think about, such as:
Check if you need a business license in your area.
Keep records of all sales and expenses throughout the year. This will make it easier when tax time comes.
Taxes can be tricky, so hiring an accountant or using tax software can help you stay on track.
If you feel that this is over your head, I highly recommend finding a professional/expert in your local area to help you further.
Frequently Asked Questions
Below are answers to common questions about how to make money baking.
What can I bake to make money?
To make money, you can bake custom cakes, cookies, cupcakes, and bread. Many people also have success with unique items like decorated sugar cookies or themed cupcakes. Dog treats are popular too!
Can baking be profitable?
Yes, baking can be profitable. By marking up your prices for profit and finding your niche, you can make a good income from your baked goods.
How to make passive income as a baker?
You can create a YouTube channel, start a baking blog, or sell baking ebooks. These options allow you to earn money even when you’re not actively baking.
Can you make a living from baking?
Yes, it’s possible to make a living from baking. Many home bakers turn their passion into a full-time business by consistently selling high-quality products and building a loyal customer base.
How much does a bakery make per month?
The amount of money that a bakery makes per month varies widely, just like with any business. Factors like location, pricing, and customer base influence earnings. Some small bakeries might make a few hundred dollars a month, while others can make thousands.
Do I need special permission or a license to sell my homemade baked goods?
Yes, you usually need a license or permit to sell homemade goods. Check your local government regulations for specific requirements. Food safety certifications might also be necessary.
How can I turn my cake decorating skills into a profitable business?
You can sell custom cake services for special occasions like birthdays and weddings.
Is it possible for kids to make money by baking and selling treats?
Yes, kids can make money by baking and selling treats. They can start small by selling to friends, family, and neighbors.
How To Make Money Baking – Summary
I hope you enjoyed this article on how to make money baking.
Baking can be a rewarding way to make extra income while doing something you love. Whether you’re selling dog treats, custom cakes, or starting a baking blog, there are many opportunities to turn your passion into a profitable side hustle or business.
I have many friends who have baking businesses, and it looks like so much fun. I have a friend who makes dog treats, a friend who sells baked goods online and in local cafes, a friend who decorates the most amazing cookies, and a friend who makes custom birthday cakes. They all seem to really love what they do, and it’s a skill that they learned over the years.
Are you interested in making money baking? Which baking business idea above do you think you’ll try?
Working with a professional real estate agent can make buying or selling a home easier. After all, they are likely to be well versed in the ins and outs of your area, how to best negotiate in the current market, and how to access any other resources (say, a home inspector) that you may need.
Working with a professional real estate agent can make buying or selling a home easier. After all, they are likely to be well versed in the ins and outs of your area, how to best negotiate in the current market, and how to access any other resources (say, a home inspector) that you may need.
While there may be some agents you hit it off with personally, this isn’t a friendship you’re pursuing but an important business relationship. It’s a collaboration that could impact both your finances and your stress level.
No matter which side of a real estate transaction you’re on (buying or selling), it can be wise to have the right professional in your corner. Eighty-nine percent of homes sold in the U.S. involve an agent or a Realtor®, according to a 2023 report. (Realtors are agents who belong to the National Association of Realtors, or NAR.)
If you’re on the hunt for an agent, it’s important to know what to ask to identify the right match. Read on to learn questions to ask, whether you’re buying or selling a property — or doing both at once. (This is a lengthy list of interview questions for real estate, so pick and choose the questions that resonate the most.)
Table of Contents
Key Points
• Interviewing realtors requires asking targeted questions to assess their suitability for your real estate needs.
• Experience, local market knowledge, and client load are critical factors to inquire about.
• Understanding a realtor’s team structure and communication methods is essential for collaboration.
• Specific questions about buying or selling processes help gauge a realtor’s expertise and alignment with your goals.
• Discussing contract terms and fees upfront avoids future misunderstandings and ensures financial clarity.
How to Interview a Realtor
First, a bit about terminology: Not all real estate agents are Realtors, but for the purposes of this article, we’ll sometimes use the two terms interchangeably.
There are different options for interviewing Realtors. You could schedule an interview:
• Over the phone
• In person
• Virtually via Zoom or Skype.
You might aim to interview at least three agents for comparison’s sake, though you may choose to interview more or fewer.
Create a list of interview questions beforehand to help you stay on track, and begin researching a home loan so you will have a sense of your budget. By the time the interview process is over, you should understand:
• What the agent’s personality and character are like: Is this person supportive and positive? Do they sound rushed and distracted?
• What kind of services they offer and what experience they bring to the table.
• How much you’ll pay for their help.
You’ll learn about how to do this in more depth as you read on.
Recommended: Tips When Shopping for a Mortgage
What to Ask About a Realtor’s Background
Any real estate agent you choose to work with should have the professional qualifications you’re looking for. But it’s also important to get a sense of who they are as an individual to avoid personality clashes. Here are some questions to ask as you evaluate an agent who might help you buy or sell a home.
1. How Long Have You Been a Realtor?
It helps to understand how long an agent you’re considering working with has been buying or selling homes. The median real estate experience of all Realtors is eight years, according to NAR.
Working with an agent who’s newer to the profession isn’t necessarily a bad thing. But one who’s more experienced may be more adept at handling any challenges that arise when buying or selling a home.
2. How Well Do You Know the Local Market?
A Realtor who knows a particular area and its local housing market trends can offer an advantage when buying or selling. Ideally, you should work with an agent who understands the local market and what trends drive it.
The more informed they are, the better equipped they are to do things like comparative market analysis, which can give you a sense of how home prices in the area are trending. They will also likely know details like, say, which parts of town are more prone to flooding than others.
Recommended: Local Housing Market Trends: Popular neighborhoods, home prices, and demographics
3. How Many Clients Do You Work With at One Time?
The answer can give you an idea of how much time an agent will be able to dedicate to working with you. Especially if you ask the follow-up question, “And how many clients do you currently have?”
4. Do You Work Alone or as Part of a Team?
Keep in mind that you may not be working with your Realtor alone to finalize the purchase or sale of a home. Agents may have a team of individuals they work with, including office managers, personal assistants, or marketing directors, who may reach out to you during the process.
Asking who else you may be connected with can help you avoid surprises if you decide to enter into a working relationship with a particular agent.
5. How Will We Communicate and How Often?
Being able to communicate with an agent is important to keep the process moving. Plenty of Realtors email and text to keep in touch with clients. If you’re the kind of person who prefers phone calls or in-person meetings, it’s good to identify communication styles up front and make sure they are in sync.
6. Do You Specialize in Buying or Selling?
Some real estate agents may choose to work exclusively with buyers, while others work only with sellers. And some can act as dual agents, representing both the buyer and seller in the same transaction. Dual agency is rare, and it’s illegal in several states. A dual agent can’t take sides or give advice.
The answer to this question will help you get a better idea of whether the agent is attuned to your side of a real estate transaction. Ideally, you want someone who is passionate about your deal, whether that’s finding the perfect house with a picket fence or selling the condo you’ve outgrown.
7. How Many Transactions Did You Close Last Year?
Asking this question can give you an idea of an agent’s overall success rate and the volume of transactions they handle.
The median number of residential transactions Realtors took part in per year in 2023 is 10. If you’re interviewing agents with closings well below that number, it could be a sign that they aren’t always successful in closing deals. If their number is much higher, it could mean they are super busy and you might not get as much attention as with another agent.
8. How Long Does It Normally Take You to Close a Deal?
Once the seller and the buyer of a property have signed their purchase agreement, closing on a home can take anywhere from a week (for an all-cash offer) to a couple of months (for those involving a mortgage) to close. As of mid-2024, the average closing time on a house was 43 days after an offer was accepted, reports ICE Mortgage Technology, Inc.
Asking a Realtor what their average closing time is can give you an idea of how efficiently and diligently they work to satisfy their clients.
If their average closing time is closer to four or six months, for example, that could be a red flag, though some deals do wind up being more complicated than others.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
9. What Are the Terms of Your Contract?
Working with a Realtor means entering into a contract, and it’s important to know what that contract says. These documents may be more common when you work with a broker to sell a home, but there are also buyer’s agreements.
These ensure that if they invest the time scanning the market for you, scheduling walk-throughs, and negotiating on your behalf, you won’t then complete the deal with, say, a relative of yours who just got their real-estate license.
When you are selling a house, you’ll sign a document agreeing that the agent will handle the sale. Once you sign a contract you’re typically locked in to working with them unless they agree to release you.
The listing agreement will last for a set period, such as three or six months. From your perspective, shorter may be better so that you’re not trapped if you don’t like the agent’s services.
10. What Fees Do You Charge?
Closely connected to contracts is the topic of money. How does it change hands? What are you liable for? Historically, real estate agents worked on commission, and the fee was paid by the seller. Now, real estate commission fees are changing, and while sellers will still likely pay agents a commission, there is no guarantee that the seller will pay the buyer’s agent. If you’re buying, you’ll need to discuss a fee structure with an agent before you begin working together. It might be an hourly fee, or perhaps a flat rate. Some agents may request a percentage of the home price.
Recommended: Do You Still Need to Put a 20% Down Payment on a House?
Questions to Ask a Realtor When You Are Selling
If you’re selling your home, here are some questions to ask to help ensure that you partner with the right agent.
11. What’s Your Typical Marketing Strategy?
A real estate agent should have a clear plan for listing and marketing your home in a way that produces the greatest odds of success in selling it quickly and at your desired price point. Let the agent you are interviewing tell you about their strategy and the results it yields.
For instance, does the Realtor believe in listing at a low price in the hopes of starting a bidding war? If so, what kinds of prices has this achieved? Where will your listing be posted? Will videos be created? Will there be an open house?
These kinds of questions can help you see if you are impressed by and aligned with how a Realtor likes to market homes.
12. Will You Handle Staging and Prep Work?
If you’re selling a home, staging it could help influence buyers’ perceptions of the property and potentially net you a higher sale price.
Staging is something you can do yourself, but your Realtor may have a staging company they work with to get the job done.
Asking about staging or small cosmetic updates, such as painting, can help you figure out what you’ll be responsible for to get your home ready for the market. There’s a price tag attached to all improvements, so you’ll want to know the numbers to be better prepared.
13. How Do You Handle Viewings?
The use of digital tools such as virtual tours have made properties more accessible to more buyers. One survey by Zillow found that almost 40% of Millenials would be comfortable buying a home online vs. in person.
See if your agent plans to create a virtual tour, but you also want to be prepared for the majority of buyers who want to visit in person. Ask Realtors how many viewings they typically schedule in a day or a week, how often open houses will be scheduled, and how they’ll be marketed.
Questions to Ask a Realtor When You Are Buying
Now you’ve learned the questions to ask a Realtor when selling. How about the other side of the deal? Whether you’re shopping for a starter home or trading up, here are a couple of important questions to ask a potential real estate agent when preparing to buy a house.
14. What Happens When I’m Ready to Make an Offer?
If you’re a buyer, agents should be able to walk you through how this process works, what to do if the seller makes a counteroffer, and what you’ll need to do next if your offer is accepted. You also want to check if they have experience with successfully navigating bidding wars, which can happen in hot markets and with well-priced properties.
Also check that they can advise you on how much earnest money you might need to pay and how to find a good, affordable home inspector, as these are important aspects of the homebuying process.
15. Will You Help Me With Getting a Mortgage?
This question will shed more light on a prospective agent’s network and experience. Agents may be able to offer recommendations for mortgage lenders. They may also be willing to communicate with your lender if there are questions about the property or the offer during underwriting.
You’re not obligated to use your Realtor’s recommended lender. In fact, it’s helpful to compare mortgage loan terms and interest rates from multiple lenders to find the option that best fits your needs.
The Takeaway
Due diligence in the search for the right real estate agent may mean interviewing a few of them and not automatically going with a friend of a friend. It’s important to know how to interview a Realtor and which questions to ask, so you can pair up with the best possible professional as you navigate this major transaction.
If you’re a buyer, once you’ve found an agent, you can turn your attention to next steps: finding a home (and a home loan) that suits your needs.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
What are the benefits of using a real estate agent to buy a house?
Having an agent to survey the available properties and recommend the ones that suit your needs could certainly save you time, and agents often have local market expertise and the inside scoop on properties that might be headed to market. An agent should also be well versed in the negotiation process (especially useful in a seller’s market) and able to help coordinate the many moving parts that lead to a closing.
What should a homebuyer do before talking to a real estate agent?
It’s wise to have an idea of your budget before consulting a real estate agent. You can prequalify for a mortgage with a few lenders to get a sense of what you might be able to borrow. Also do research online about your desired town or neighborhood to get a sense of where you would like to live. And know your non-negotiables — minimum number of bedrooms, whether you prefer an old home or new construction, for example.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
I’ve said for a while that the mortgage recapture game was going to ramp up and get more aggressive.
Customer retention has always been a big thing in every industry, but thanks to new technology and “AI” companies are getting better at it.
Many of the largest mortgage companies have also been growing their mortgage servicing portfolios for this very reason.
Instead of handing off their borrowers to third-party companies, they’re retaining servicing rights so they can mine their database of homeowners for future offers.
And with mortgage rates finally showing some real promise, there could be a lot of opportunity going forward.
The Refi Boom Is, Apparently, Here
UWM just proclaimed that “the refi boom is officially here,” and wants to make sure its mortgage broker partners are “ready for it.”
To help give them a boost, they have launched a new initiative called KEEP, which leverages artificial intelligence (AI) to help brokers stay in front of their old clients.
The way it works is fairly simple. It continuously scans the data from UWM’s portfolio and identifies borrowers “who will benefit from a mortgage refinance.”
Once a match is found, it automatically sends an email to the customer with a pre-validated offer, including the contact information of the originating broker.
Borrowers will see their current monthly payment, estimated new payment, and estimated monthly savings.
It will also include disclosures such as the loan type, loan-to-value ratio (LTV), amount of discount points required, and APR.
It’s unclear what the threshold is for an offer to be generated, but UWM says these offers will be sent to borrowers “as soon as a borrower is able to obtain meaningful savings on their monthly payment.”
From there, all a borrower has to do is review and submit a pre-populated loan application, which then winds up in the broker’s pipeline.
It appears to be the next iteration of what may have been the old process, a manual outreach campaign once brokers found possible refinance candidates.
Now they might not have to do a thing other than log on to the UWM dashboard and check to see if any new loans dropped into their pipeline. Talk about a nice surprise!
Good News for Brokers, But Borrowers Should Still Shop Around
While this new initiative will likely be great for both UWM, the nation’s #1 mortgage lender, and its broker partners, borrowers still need to be diligent.
Sure, it’s convenient and easy to get emailed a mortgage refinance offer and simply respond and submit the pre-populated application.
But it’s not always about easy, especially if we’re talking about saving money. Sure, you can hear the broker out and discuss the offer.
At the same time, you might want to speak with other banks, brokers, retail lenders, credit unions, etc. to see what they can offer. Maybe they can beat the rate/fees.
As I’ve mentioned time and time again, you need to compare mortgage brokers too, as their pricing and service can vary widely as well.
Many of them work with different wholesale lenders and have distinct compensation structures. That can affect mortgage rate pricing a lot.
Now there’s nothing wrong with loyalty, especially if you enjoyed the prior experience with your broker, but you also have to ensure they still offer competitive pricing.
One month lender X offers the lowest mortgage rates, and the next month lender Y is the price leader.
So as I’ve said before, when a lender reaches out, reach out to other lenders.
This is especially true when we’re talking about a rate and term refinance, which actually needs to save you money to be worthwhile.
A week ago, UWM also launched Refi75, a 75-basis point pricing incentive for conventional, FHA and USDA rate and term refinances, as well as for FHA Streamlines and VA IRRRLs.
Be sure to look at the big picture, including the final interest rate and all closing costs, to effectively compare offers.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Do you want to know how to save for a baby in 9 months? Having a baby is exciting and joyful, but it also brings new costs. Getting your finances ready in the months before your baby arrives can make things easier. Saving for a baby in just nine months is possible if you plan…
Do you want to know how to save for a baby in 9 months?
Having a baby is exciting and joyful, but it also brings new costs. Getting your finances ready in the months before your baby arrives can make things easier. Saving for a baby in just nine months is possible if you plan and budget well.
To get ready for these changes, you might need to change how you spend money now and save up for future costs. It’s a good time to think about where you can save and how to use your money wisely for your growing family.
Best Ways To Save for a Baby in 9 Months
Below is how to save for a baby in nine months.
1. Set a budget
The very first thing you should do if you want to learn how to save for a baby in nine months is look at your budget.
Setting a budget involves taking a good look at your current finances and figuring out how much money you’ll need to save for baby-related expenses. This will help you plan and avoid any big financial surprises.
First, you need to know where your money is going. Track all your income and spending for a month or two. Include everything like rent, groceries, utilities, health insurance, life insurance policy, and entertainment. Also, don’t forget about annual or longer-term expenses, like possibly a car insurance payment that only comes up every six months or a property tax bill.
Use a spreadsheet or budgeting app to list all your expenses. And, break down your spending into categories like housing, food, transport, and bills.
Next, review your financial statements, such as bank accounts, credit cards, and any loans. Note any areas where you might be able to cut costs. For example, can you dine out less or cancel unused subscriptions? Can you negotiate any of your bills or shop around to get a better rate?
Finally, total up your monthly income and compare this with your total expenses. This will help you see if you need to make changes to save for baby expenses.
You can learn more at How To Create A Budget That Works.
2. Calculate baby-related expenses
Now, let’s figure out how much money you’ll need for the baby. As everyone knows, having a baby can be expensive!
You can start by listing one-time larger expenses for things like a crib, stroller, and car seat. Then, there are many smaller expenses, like blankets, changing table, diaper bag, swing, rocking chair, dresser, crib mattress, and more (you don’t need everything on this list, though).
Next, think about monthly expenses such as diapers, formula, and baby clothes. And, if you plan on breastfeeding, don’t forget that there may be higher costs with that as well (many people think that breastfeeding is free, but that’s not always the case). Even if you are breastfeeding, you may have costs related to creams, pads, a breast pump, a lactation consultant, and more.
Medical costs can also add up quickly, so you will want to check what your insurance covers for prenatal and postnatal care. You will want to think about what you may have to pay out-of-pocket when/if you go to the hospital for labor, any midwives you may use, and more.
You may also want to think about childcare costs, whether it’s daycare, a nanny, or a babysitter.
Don’t forget to include potential changes in income, especially if you or your partner plan to take time off work.
And then, there are bigger-picture expenses that you may eventually want to start thinking about as well, such as college savings and starting a college fund.
Remember to adjust your budget as needed. Babies grow fast, so your spending will change. Be flexible, and update your budget to meet your baby’s needs.
3. Cut unnecessary expenses
If you need to find more money in your budget and stretch your paycheck, then I recommend looking at your current spending and finding areas where you can cut back. Every dollar saved can go toward your new baby.
Here are some ideas:
Skip eating out frequently. Cooking at home saves a lot of money. Plus, you can make extra portions for leftovers.
Evaluate your subscriptions. Do you need all those streaming services? Cancel the ones you use the least.
Stop buying expensive coffee every day. Brew your coffee at home instead. It’s much cheaper and can be just as tasty (plus, it saves you valuable time).
Limit buying new clothes. See if you can make do with what you already have or shop at thrift stores.
Avoid impulsive buys. Always make a shopping list and stick to it. This helps you avoid buying items you don’t need.
Cut down on travel costs. Save on gas by combining errands into one trip and using public transportation when possible.
Reduce utility bills. Simple actions like turning off lights and unplugging devices can lower your electricity costs.
Look for deals and coupons for groceries and household items. Many stores offer discounts that can help you save a lot.
Now, of course, not everyone will want to do everything on the list. You may want to just try one or two, or you may decide to do them all. It is personal and it all depends on how much money you want or need to save.
Every little bit helps. By cutting unnecessary expenses, you’ll free up money that can go toward preparing for your baby’s arrival.
4. Meal plan and bulk cook
One smart way to save money and reduce stress is by meal planning and bulk cooking freezer meals before your baby is born.
This strategy allows you to prepare meals in advance and freeze them, so you’ll have ready-to-eat options when you’re too busy with the baby to cook.
By buying ingredients in bulk and preparing meals ahead of time, you can save a significant amount on groceries, avoid the temptation of takeout, and make sure you’re eating well during those hectic early days of parenthood.
Plus, having meals ready to go in the freezer means one less thing to worry about as you adjust to life with a newborn.
Some easy meals that you can make ahead include:
Lasagna – A classic dish that freezes well. You can make a big batch, portion it out, and freeze it. When you’re ready to eat, just pop it in the oven.
Stir-fry – Cook chicken and your favorite vegetables with a simple sauce. Freeze in portions and serve over rice or noodles.
Chili – A hearty and versatile meal that’s easy to freeze. Make a large pot, and freeze it in individual portions. It’s perfect for quick lunches or dinners.
Casseroles – Dishes like shepherd’s pie or chicken and rice casseroles are ideal for freezing. They can be made in bulk and heated up in the oven.
Soups and stews – These are some of the easiest meals to freeze. Options like vegetable soup, beef stew, or chicken noodle soup can be made in large batches and stored in the freezer for later use.
Burritos – Assemble burritos with fillings like beans, rice, chicken, or beef. Wrap them individually and freeze. They’re great for quick, handheld meals.
Meatballs – Cook and freeze meatballs in marinara sauce. They can be served with pasta, in a sub, or as a quick protein-packed snack.
Quiche – A versatile dish that can be filled with various vegetables, meats, and cheeses. Bake, cool, and freeze for a quick breakfast, lunch, or dinner.
These meals are easy to prepare in large quantities, freeze well, and can be reheated with minimal effort – perfect for those busy days after the baby arrives.
I really wish I would have done this before I had my daughter. I think it would have been a lifesaver! I have a friend who recently had a get-together (during her pregnancy) with all of her friends and they spent all day prepping meals for her. I thought this was a wonderful idea and so sweet.
I recommend reading 15 Delicious, Easy Freezer Meals For New Moms & Dads to see more ideas.
5. Use cash back apps
Cash back apps can be a great way to save money. These apps give you a percentage of your spending back in cash or rewards.
My favorite cash back apps are:
Fetch Rewards – This is my absolute favorite cash back app, and you can get points back on ANY grocery store receipt, and then eventually turn your points into gift cards.
Swagbucks – This is a rewards site that will give you cash back as well as help you make some extra money online.
Rakuten – This is my favorite cash back site for when shopping online as almost every store is listed on this website.
Upside – This app is a great way to get cash back on your gas purchases.
Honey – This app is great for online shopping and coupon codes.
Cashback apps can make a difference. Every little bit adds up when you are preparing for a baby.
6. Buy secondhand baby gear
One of the best ways to save money when preparing for a baby is to buy secondhand baby gear. Babies grow quickly and tend to use items for only a short time. This means you can find gently used gear at a fraction of the cost.
And, you can often find high-quality brands that are built to last when shopping secondhand! Baby strollers, cribs, and high chairs are usually available in good condition if you shop around. Make sure you inspect these items carefully for any damage or missing parts.
Shopping for used baby clothes can also save you a lot of money. Babies outgrow clothes so fast that you can often find barely worn outfits at thrift stores or online marketplaces.
You can find secondhand baby items at places like thrift stores, online marketplaces, and even through friends and family.
Some of the most popular ways to find used baby gear include:
Once Upon a Child
Goodwill
Salvation Army
Poshmark
Facebook Marketplace
Buy Nothing groups on Facebook
Local parent groups on Facebook – I’m a part of a local mom group in my area, and moms are always giving away free things, such as strollers, clothes, diapers, and more.
7. Find ways to make extra money
There are many ways to make money while preparing for a baby.
Here are some ideas:
Freelancing – You can freelance in areas like writing, graphic design, proofreading, or social media management.
Selling unused items – Go through your home and sell items you no longer need, like clothes, electronics, or furniture. Platforms like eBay, Poshmark, and Facebook Marketplace make it easy to sell your items locally or online.
Taking online surveys – Answer online surveys through platforms like Swagbucks, Survey Junkie, or Branded Surveys. While not a huge income, surveys can help you make some extra cash or gift cards that can be used for baby-related expenses.
Providing babysitting or pet sitting services – If you have experience with kids or pets, you may want to babysit or pet sit. Websites like Care.com, local Facebook groups, and Rover can help you find clients.
Starting a side hustle – You may want to try starting a small side business, like selling printables on Etsy, blogging (this is what I do so that I can work from home!), or bookkeeping. A side hustle can grow into a steady source of income over time.
You can learn more at 16 Best Jobs for Pregnant Women.
8. Find cheap or free diapers
Diapers can be one of the biggest expenses for a new parent. Buying them on sale or even finding them for free is a smart way to save money.
Some ways to get free or cheap diapers include:
Ask in a Buy Nothing group on Facebook – Join local groups where people give away items they no longer need, including diapers.
Join rewards programs – Sign up for programs like Pampers Club or Huggies Rewards to earn points that can be redeemed for free diapers.
Sign up for diaper coupons – Register on diaper brand websites to receive coupons and promotions via email.
Check online marketplaces – Look for free diapers on Craigslist, Facebook Marketplace, and Freecycle.
Visit local diaper banks – Access free diapers through local community organizations or diaper banks.
Apply for government assistance – Explore programs like TANF that may offer diaper allowances.
Use the National Diaper Bank Network – Find a nearby diaper bank through this network’s resources.
Reach out to nonprofit playgroups – Connect with local playgroups that provide free diapers to families in need.
Add diapers to your registry – Include diapers on your baby registry or create a diaper fund for your baby shower.
Use cloth diapers – Save money by using reusable cloth diapers instead of disposable diapers.
I recommend reading How To Get Free Diapers: Free Diaper Boxes, Samples, Coupons to learn more.
9. Build an emergency fund
An emergency fund is a savings account for unexpected expenses. This might include medical bills, car repairs, or sudden job loss.
This is something that I highly recommend having because it will help to lessen your stress level a little bit once the baby comes. This money gives you peace of mind when life throws you a curveball.
I recommend that you aim to save enough to cover 3 to 6 months of living expenses. But, you should definitely start small if you need to. Setting aside $1,000 is a good first goal. Even a little cushion can prevent you from going into debt.
Then, save what you can each month. Even small amounts add up over time, and this makes your emergency fund grow slowly and steadily. If you get a tax refund, use it to increase your emergency fund. Extra money can help you reach your goal faster.
And, keep your emergency fund in a separate savings account. It should be easy to access but not too easy to spend.
I personally use Marcus by Goldman Sachs for my emergency fund as they have a very high rate. You can get up to 4.40% at the time of this writing through a referral link bonus. According to this high-yield savings account calculator, if you have $10,000 saved, you could earn $440 with a high-yield savings account in a year. Whereas with normal banks, your earnings would only be $46. That’s a big difference!
Building an emergency fund takes time, so be patient. Consistency is key and I recommend that you keep contributing whenever you can.
Frequently Asked Questions
Saving for a baby can be tough, but it’s doable with the right plan. Here are some common questions and helpful tips to guide you as you get your finances ready for your new family member.
What are the top ways to save money for my baby’s first year?
To save money for your baby’s first year, I recommend that you find ways to cut unnecessary expenses wherever you can. Try meal planning and bulk cooking to save on food, use cash back apps to get some money back on purchases, and find ways to make extra money.
How much to save for baby’s first year?
Deciding how much to save for your baby’s first year is hard. You can expect to spend on things like diapers, formula (or breastfeeding items), and baby gear. Diapers and wipes might cost around $50 to $100 per month. Formula can add another $100 to $150 each month. Also, include costs for clothes, toys, and medical bills.
What to do if not financially ready for a baby but pregnant?
If you are not financially ready for a baby, but you are currently pregnant, there are things that you can do. I recommend that you reach out to community resources or government assistance programs for help as many areas give free or low-cost baby supplies. You can also ask friends and family for hand-me-downs. Start saving whatever you can now; even small amounts help.
Is 9 months enough time to prepare for a baby?
Yes, nine months can be enough time to prepare for a baby. Start by making a plan and budget right away. Cut back on unnecessary spending, use this time to save as much as you can, and look for deals on baby items.
How expensive is having a baby?
Having a baby can be expensive. The first year alone can cost several thousand dollars. Baby gear, diapers, formula, and medical bills add up quickly. Planning, budgeting, and finding ways to save can make these costs more manageable.
How To Save for a Baby in 9 Months – Summary
I hope you enjoyed this article on how to save for a baby in nine months.
Getting ready financially for a baby in nine months might feel like a lot, but with some planning, it can be doable.
By making a budget, cutting out extra spending, and thinking ahead about baby costs, you can save a good amount of money before your baby comes. You can save even more by planning meals, cooking in bulk, using cash back apps, and buying used baby items.
Every bit of savings helps, and by starting now, you’ll be more prepared to welcome your baby without worrying about money.
What do you think are the best ways to save for a baby in 9 months?
Lately, savings accounts have been paying a pretty solid return. Companies like Capital One and Discover have been offering over 4% APY.
It’s not necessarily free money, given the high rate of inflation, but it’s been one way to keep your dollars from eroding in value versus just putting them in a bank account earning a measly 0.01%.
When savings rates began to rise a few years ago, I started to make my mortgage payments later in the month.
The logic was that I could earn more interest on my money if I kept more of it in a savings account for a longer amount of time.
While maybe not a massive amount of money, still more money.
You Don’t Get Any Savings by Paying on the 1st of the Month
First a quick overview. Mortgage payments are typically due on the first of the month, but not actually late until 15 days later.
In other words, most loan servicers will give you a grace period to pay any time between the first of the month and the 15th without penalty.
So while “technically due” on the first, it’s not actually late until the 16th. I never looked into why they do this, but this tends to be the universal rule (always check with your bank/servicer to be sure!).
And because most mortgages in the United States are simple interest and calculated monthly, it doesn’t matter when you pay in terms of interest charges.
If you pay on the first every month, you won’t save money on mortgage interest versus paying on the fifth or the 15th.
The amount of interest due is already determined and you’re simply making a payment for the prior month’s interest.
In short, there is no benefit to paying early in the month vs. mid-month. This isn’t the case for HELOCs, which are calculated daily.
You Could Get Savings by Paying Mid-Month
While you won’t see any interest savings by making mortgage payments early in the month, you could see savings if you wait until closer to mid-month.
As noted, many savings account pay 4% or more at the moment.
If your mortgage payment is say $3,000 per month, you could arguably keep that money in your high-yield account until the 13th.
That would give you another couple weeks of earnings at whatever the yield is, say 4%. And that would mean a higher interest payout at the end of the month in your savings account.
While it might not be a ton of money, it can add up, especially if you have larger mortgage payments and/or multiple payments to make.
The interest will also compound over time and make it even more valuable the longer you do this.
This is why I often pay my mortgage closer to the 15th of the month. They say every little bit helps.
Pay Other High-Rate Debt Early in the Month Instead
What if you carry other, higher-interest rate debt that accrues interest daily, such as a credit card?
Many Americans have revolving credit card debt that isn’t paid off in full each month. As a result, interest accrues every day on the outstanding balance.
Obviously, you should strive to pay the balance in full by the due date each month so this isn’t the case and you get a “grace period.”
But if this isn’t feasible, you could argue to pay as much toward that balance (or balances) as early as possible to reduce the interest expense.
Then just be sure to pay the mortgage before the due date.
In this scenario, you’re essentially allocating money toward the debt that is actually costing you more money each day.
The mortgage interest due is the same whether paid on the first or 15th, so there’s no advantage to paying it sooner.
The one caveat here is to make sure your payment clears on time. That’s why I usually pay on the 12th or 13th to ensure there isn’t a delay or something.
If there is, you could be charged a sizable late fee. But note that mortgages aren’t considered delinquent until 30 days past the due date, at which point it could be communicated to the credit bureaus.
The takeaway here might be to remember that there’s no benefit to paying a mortgage early in the month, but there could be a big benefit to paying other debt early, like a credit card or HELOC.
However, you can still pay off your mortgage early if you choose, but that involves making additional payments to the principal balance, beyond the regular payment due.
And doing so early on in the loan term can actually save you more.
(photo: Vanessa)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Lately, savings accounts have been paying a pretty solid return. Companies like Capital One and Discover have been offering over 4% APY.
It’s not necessarily free money, given the high rate of inflation, but it’s been one way to keep your dollars from eroding in value versus just putting them in a bank account earning a measly 0.01%.
When savings rates began to rise a few years ago, I started to make my mortgage payments later in the month.
The logic was that I could earn more interest on my money if I kept more of it in a savings account for a longer amount of time.
While maybe not a massive amount of money, still more money.
You Don’t Get Any Savings by Paying on the 1st of the Month
First a quick overview. Mortgage payments are typically due on the first of the month, but not actually late until 15 days later.
In other words, most loan servicers will give you a grace period to pay any time between the first of the month and the 15th without penalty.
So while “technically due” on the first, it’s not actually late until the 16th. I never looked into why they do this, but this tends to be the universal rule (always check with your bank/servicer to be sure!).
And because most mortgages in the United States are simple interest and calculated monthly, it doesn’t matter when you pay in terms of interest charges.
If you pay on the first every month, you won’t save money on mortgage interest versus paying on the fifth or the 15th.
The amount of interest due is already determined and you’re simply making a payment for the prior month’s interest.
In short, there is no benefit to paying early in the month vs. mid-month. This isn’t the case for HELOCs, which are calculated daily.
You Could Get Savings by Paying Mid-Month
While you won’t see any interest savings by making mortgage payments early in the month, you could see savings if you wait until closer to mid-month.
As noted, many savings account pay 4% or more at the moment.
If your mortgage payment is say $3,000 per month, you could arguably keep that money in your high-yield account until the 13th.
That would give you another couple weeks of earnings at whatever the yield is, say 4%. And that would mean a higher interest payout at the end of the month in your savings account.
While it might not be a ton of money, it can add up, especially if you have larger mortgage payments and/or multiple payments to make.
The interest will also compound over time and make it even more valuable the longer you do this.
This is why I often pay my mortgage closer to the 15th of the month. They say every little bit helps.
Pay Other High-Rate Debt Early in the Month Instead
What if you carry other, higher-interest rate debt that accrues interest daily, such as a credit card?
Many Americans have revolving credit card debt that isn’t paid off in full each month. As a result, interest accrues every day on the outstanding balance.
Obviously, you should strive to pay the balance in full by the due date each month so this isn’t the case and you get a “grace period.”
But if this isn’t feasible, you could argue to pay as much toward that balance (or balances) as early as possible to reduce the interest expense.
Then just be sure to pay the mortgage before the due date.
In this scenario, you’re essentially allocating money toward the debt that is actually costing you more money each day.
The mortgage interest due is the same whether paid on the first or 15th, so there’s no advantage to paying it sooner.
The one caveat here is to make sure your payment clears on time. That’s why I usually pay on the 12th or 13th to ensure there isn’t a delay or something.
If there is, you could be charged a sizable late fee. But note that mortgages aren’t considered delinquent until 30 days past the due date, at which point it could be communicated to the credit bureaus.
The takeaway here might be to remember that there’s no benefit to paying a mortgage early in the month, but there could be a big benefit to paying other debt early, like a credit card or HELOC.
However, you can still pay off your mortgage early if you choose, but that involves making additional payments to the principal balance, beyond the regular payment due.
And doing so early on in the loan term can actually save you more.
(photo: Vanessa)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn expert tips and tricks for saving money on holiday travel booking, from the best time to book to when you should use rewards points.
When should you book your holiday travel? How can you save money on travel during the busiest travel season? Hosts Sean Pyles and Meghan Coyle talk to travel rewards Nerd Sam Kemmis about how to save money when booking holiday travel, with tips and tricks on using companion fares, the optimal time to book holiday flights, and understanding the fine print of airline programs. They also discuss the challenges and benefits of standby flights, the value of subscribing to flight deal newsletters, and the advantages of using credit card points and transferring them to partner airlines. By exploring these topics, the hosts aim to provide listeners with actionable advice to make holiday travel more affordable and less stressful.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Over the river and through the woods, to Grandmother’s house we go. And if you don’t want that to break the bank, have we got an episode for you — and Grandma. Today, tips and tricks for saving money on holiday travel booking.
Sam Kemmis:
Because changing and canceling flights for most airlines is a lot easier now than it used to be, and there aren’t as many change and cancellation fees, that actually is a pretty good strategy.
Sean Pyles:
Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Meghan Coyle:
And I’m Meghan Coyle.
Sean Pyles:
And this is episode two of our Nerdy deep dive into holiday travel and the costs therein. And Meghan, I know you and I are both in the camp of avoiding holiday travel if at all possible. As much as we love our families, sometimes the hassle of getting to them just isn’t worth a wing and a leg of, you know… turkey.
Meghan Coyle:
Yeah. I heard what you did there, Sean. As we know, plenty of people do brave the crowds and the lines and the delays to see their loved ones over the holidays, so we are here to help smooth that process as best we can, especially when it comes to what you’re spending on that travel.
Sean Pyles:
The holidays are infamous for higher prices, especially on airfares, and there are definitely ways to save money if you’re willing to be a little flexible.
Meghan Coyle:
Sean Pyles:
Ooh, I love secrets, and we’re going to share lots of them today. So listener, perk up your ears like you’re listening for sleigh bells in the distance because we’re going to drop a lot of insider knowledge on you today. It’s our holiday gift to you.
Meghan Coyle:
That’s right, wrapped up all pretty and nice.
Sean Pyles:
We want to hear what you think too, listeners. To share your ideas and experiences around holiday travel with us—the good, the bad, and the insanity—leave us a voicemail or text the Nerd hotline at 901-730-6373, that’s 901-730-NERD, or email a voice memo to [email protected]. So Meghan, who are we hearing from today?
Meghan Coyle:
Today, our guest is our Nerdy colleague, Sam Kemmis, and we’re going to explore all the ways you can save yourself some cash when you’re booking holiday travel, and you don’t necessarily need to redeem your points to do it.
Sean Pyles:
That’s coming up in a moment. Stay with us.
Meghan Coyle:
Hey, Sam. So great to have you back on the show.
Sam Kemmis:
It’s so great to be here.
Meghan Coyle:
What are your travel plans for the holidays?
Sam Kemmis:
They’re not the most exciting, but I’m going to go home to Montana, where I’m from, with my kids to see family.
Meghan Coyle:
Aw, that sounds really sweet.
Sam Kemmis:
Meghan Coyle:
Is it going to be cold there?
Sam Kemmis:
Oh, yeah. It’s always cold. I always go for the cold snap. It always gets into the negative temperatures while we’re there.
Meghan Coyle:
Sam Kemmis:
This is always the question, and I wish I had that silver bullet where I’m like, “Here’s the one weird trick to saving money on holiday travel,” but the truth is it’s hard to do. But I do have a few tricks up my sleeve. So one of them is using companion fares. My partner and I both have the Alaska companion fare, which is great because we have two kids, and it lets us book a second ticket for just a little over $100 no matter how much the first ticket costs. Because you’re spending the same amount on that second ticket no matter what, the more expensive your first ticket is, the more value you’re getting from it. Holiday travel tends to be pretty expensive, so I usually save that companion fare for the holiday so I can kind of maximize that difference between the $100 and whatever I end up paying for the actual fare.
Meghan Coyle:
So it’s kind of like you’re almost using your companion fare as a kid discount, a child discount on your airfare for the holidays.
Sam Kemmis:
I wish my oldest was still young enough that I could put her on my lap. That’s the real discount for the holidays. In a pinch, I use companion fares. Alaska has a great one, but there’s also one from Delta. Southwest has its sort of famous one. There are some companion fare options out there.
Meghan Coyle:
And tell us how Alaska’s companion fare works. I believe you get that through a credit card, is that right?
Sam Kemmis:
Yes. You get it through its co-branded credit card and you get one of them to use every year.
Meghan Coyle:
Is this an annual tradition of yours to use the companion fare on the holidays?
Sam Kemmis:
Yeah, I guess it is becoming one as my kids get older. It used to be I would try to just book the most ludicrous flight that would still qualify with stopovers and multi-cities and going to Costa Rica and whatever I could do. But for one thing, Alaska has sort of changed the terms of it so it’s not so easy to do that. And now, yeah, not as exciting and my most expensive trip is usually home for the holidays.
Meghan Coyle:
Makes sense. Yeah. And I know some of the other companion fares have different terms and things like that, but Southwest’s companion pass lets you get flights for a discount for the entire year, so the holidays are also a great time to use that for a really high value.
Sam Kemmis:
Just no blackout dates on those, as far as I know.
Meghan Coyle:
That’s what we’re looking for for holiday travel because the travel companies know that these are such high demand times. You have to be really careful with the deals. Let’s talk about when you book your holiday travel. Have you done that already?
Sam Kemmis:
I have not. I have learned from covering this beat for so long that it’s actually usually better to wait until the fall to book, and maybe even a little later in the fall. So that’s easy for me because I’m a procrastinator, but I know there are a lot of people who want to book as early as possible. But the data show that booking months in advance doesn’t actually save you money. One piece of data I got from Google Flights that they shared with me showed that the lowest prices for the holidays usually happen between 80 and 20 days before departure, so about one to two months before departure, and that’s true for both Thanksgiving and the December holidays. If I’m booking for Christmas, that will put it somewhere in October, likely, that I’m booking. That’s a rule of thumb, but every year is different. It could be that if you wait until that 20-day cutoff that prices will actually go up, or that may be when prices are actually lowest. Just like anything that revolves around supply and demand, there’s no way to really play the market. Booking way in advance is usually not a great idea.
Meghan Coyle:
Okay, that makes me feel a lot better because I haven’t even started thinking about it yet.
Sam Kemmis:
I know. It’s like 95 degrees here. It’s hard to imagine.
Meghan Coyle:
I know we’re talking a bit early about holiday plans, and one thing I wanted to float out there is that you could book something now and kind of lock in a lower rate, and then you might be able to rebook it or change it or cancel it if something happens, your travel plans change, or even the price goes down. Can you talk a little bit about that and why that might be a good option for the holiday travel?
Sam Kemmis:
Yeah, because changing and canceling flights for most airlines is a lot easier now than it used to be, and there aren’t as many change and cancellation fees, that actually is a pretty good strategy. If you’re just one of those people that doesn’t want to wait and you see a decent price right now, you can always book it now and, like you said, either change the ticket when you see a better price and you might get a refund on that difference, or just cancel your ticket outright and rebook the lower price. So that’s not a bad idea.
You want to be a little careful, though, to make sure that you’re actually booking a refundable flight. And that doesn’t mean a fully refundable fare, but usually basic economy flights and flights with budget airlines like Spirit and Frontier do not have full cancelability. They won’t offer a full refund, especially those basic economy tickets. You want to watch out booking those. You probably won’t be able to get your money back. The same thing applies for hotels. Hotels are usually a lot easier. They’re usually much more flexible in terms of letting you rebook and even cancel last-minute. You can always book some hotel rooms in advance as long as you’re checking that fine print and making sure that you can cancel it later.
Meghan Coyle:
Something I used to do in college as well was I would take advantage of same-day changes and standby to help save a bit of money on holiday travel. I’ll tell you how this worked and then you can tell me if that was a good strategy or not to use.
Sam Kemmis:
Yeah, I want to hear about this.
Meghan Coyle:
I went to school out of state, so I had to fly home for the holidays. The cheapest flights were usually these super early morning, 6:00 AM flights, or maybe they would have some stops or I would take the red eye. I mean, these were just awful flights I was booking. But if you look into some of the same-day change policies and standby policies, you might actually be able to sometimes call your airline ahead of time, like the day before, or even look in the app and see if there was any availability on a better flight. As long as your departure airport and your arrival airport didn’t change and you were still taking off on the same calendar day, you can save a lot of money by just taking any of those extra seats on a better-timed flight. Something I would do is I would book maybe the earliest flight back on the Friday after Thanksgiving, and then I wouldn’t actually get up at 6:00 AM after eating tons of turkey the day before. I would just check on Thanksgiving and change it, sometimes for free if you have elite status, or there’s some type of policy that’ll let you change for free, or I would pay a pretty nominal fee, like $75, and fly back at a much more normal time. What did you think about that strategy?
Sam Kemmis:
That’s not bad, and I’ve definitely done things like that. I think it’s for sure a good college student strategy because it works as long as you’re pretty flexible on what actually ends up happening. You can have this great plan and, “Oh, I’m going to change it to a better flight,” and there may just not be better flights available. Or you could sort of go on standby, that fills up, and then you’ve got to get over to your actual flight or onto another standby. You could kind of end up in this purgatory where you’re not on any flight.
Meghan Coyle:
Sam Kemmis:
Obviously, I’m speaking in generalities because every airline is going to have different policies for this.
Meghan Coyle:
Sam Kemmis:
I love it. I love that kind of thing. I’ve done that with red eyes where I’ve booked a red eye that’s way cheaper and then just said, “Oh. Actually, could I just fly a normal flight?” and it works out. Totally a possibility if you’re willing to put in a little extra uncertainty work.
Meghan Coyle:
That’s a good call out. And probably wouldn’t work if you have multiple people traveling, like your family, so that would make it a bit more difficult.
Sam Kemmis:
Yeah, I think my kids would break up with me.
Meghan Coyle:
So where should people look for deals, whether on hotels or airlines, for holiday travel?
Sam Kemmis:
Airline deals themselves can be tough for the holidays. You might see airlines promote different sales, but usually those have blackout dates that are actually around the holidays. And so unless you’re willing to fly quite far off from the holiday itself, that’s probably not going to apply. That said, it might be worth subscribing to some flight deal newsletters or social media accounts. You can find those on Instagram or TikTok, and email newsletters are all over the place. And every once in a while, those will have deals around the holidays, especially internationally, especially around Thanksgiving. Because other places don’t celebrate our Thanksgiving, you can find deals around then for sure. Hotels also might have some deals around the holidays depending on how popular that particular property is around that particular holiday, so it’s worth going to the hotel’s website to see if they have any packages that might be a good deal.
Meghan Coyle:
I know we talked about this earlier in the episode—your credit card can come in handy for saving cash on travel purchases. Yours was through a companion fare through your Alaska co-branded card. What are some other situations where you should maybe look at your credit card and see how it can save you cash for holiday travel?
Sam Kemmis:
There’s a few options. One is using your credit card points. The most obvious way to do that is through the booking portal that the credit card has, so Chase Travel or AmEx Travel, whatever it is. Then you’re basically using the points for a fixed value, so you’re essentially buying cash tickets and using the points to pay for those cash tickets. If you’ve got a big pile of points and you want to use them up and you’re going to book a flight anyway, that’s not a bad way to do it. But there is another way to do it, which is to transfer those credit card points to a partner airline, and then book award travel through the partner airline. For instance, you might transfer them to American Airlines and then book using miles through American. So I say that’s another option. We’ve looked into the data and have seen that those bookings don’t usually offer a better cent-per-point value than booking at any other time, but they’re also not much worse. If a flight is twice as expensive as it normally is around the holidays, it will probably be about twice as expensive using miles. So again, there’s no free lunch here, there’s no way to game the system, but you might be able to find a little bit more value by transferring those credit card points to an airline and then booking through the airline.
Meghan Coyle:
Okay. Yeah, that makes sense. And you could also do half points, half cash in a lot of cases if you’re booking through the portal, right? So that might be a way to save some cash as well.
Sam Kemmis:
Yeah, it’s all relative. Do we call our credit card points cash? Are they their own thing? What is it?
Meghan Coyle:
Now we’re getting super nerdy. Are they cash?
Sam Kemmis:
Yeah. Yeah. Sometimes, also, your credit card might have cash back offers on certain hotels or other travel opportunities. Chase offers or AmEx offers might give you 10% back on a statement credit, so you could add that offer to your travel card before you book. Some travel credit cards offer statement credits on travel purchases either booked through the issuer’s travel portal or booked directly with a certain airline or a hotel. That’s a way to offset both the airline cost and the hotel cost.
Meghan Coyle:
Okay. Now let’s make it a little bit spicy. Let’s say you don’t have to go home for the holidays. You want to use that time off to go somewhere else. What are some good ways to save money on this type of holiday travel that’s more like a vacation?
Sam Kemmis:
One option is to go international. Like I said, other countries aren’t necessarily celebrating Thanksgiving. Some don’t celebrate Christmas or the same holidays in December. It might be worth looking at some of those countries to see if there’s some cheaper flight options. And then you can always check out Google Flights or Skyscanner search tools and put in “Anywhere” for the destination. Just be like, “Surprise me,” and just see what’s cheap.
Meghan Coyle:
I love that. You could end up literally anywhere for the holidays. Any other tips for saving on holiday travel without using your points?
Sam Kemmis:
I plug this all the time. I’m always promoting selling your family on doing Thanksgiving the week before or after actual Thanksgiving because…
Meghan Coyle:
Oh, yeah. I remember you wrote an article about this.
Sam Kemmis:
I did, and nobody ever cares and nobody ever bites, but I’m going to say it again. If you just convince your family to do it the week after, airfare will be half as expensive. There will be so much availability for vacation rentals, anything you need, and it still feels like the holiday. It doesn’t really matter as long as you all agree. Then you could extend that out to anything and be like, “Is anything real? Is everything arbitrary? Is it all just in our minds?”
Meghan Coyle:
And with that, we’ll leave everyone with a lot of existential questions.
Sam Kemmis:
That’s right.
Meghan Coyle:
Well, Sam, I know it’s a couple of months away, but I hope you have a great holiday season, or let’s just say a great fall/autumn season, and thanks so much for helping us out today.
Sam Kemmis:
My pleasure.
Sean Pyles:
As ever, I am impressed by how far a little flexibility can go when it comes to saving money on travel. And I say that as someone who is totally inflexible with my travel plans and therefore will never save money like you described doing in college, Meghan. That might be another reason why traveling around the holidays is not my thing.
Meghan Coyle:
I’ll say I did a lot of crazy things as a college student to save money. I remember going to these hour-long talks about the economy so I could get a free Chipotle burrito, and then it turned out it wasn’t even a whole burrito. That tells you how much my time was worth back then. One hour equals half a Chipotle burrito. But back to holiday travel, flexibility is really the key to getting deals on travel at any time of the year.
Sean Pyles:
Yeah. This is really something that I’ve taken to heart, which is that if you’re going to travel for the holidays, try to do it on the days when other people don’t. I mean, if you travel on the holiday itself, sure, you might miss out on some meal prep and maybe some games in the backyard if it’s not snowing where you are, but the hassles you’ll avoid just might be worth it. Now of course, that might not work if you have to deal with layovers or you’re going, say, from the West Coast to the East Coast and the time change makes it untenable. But if you don’t have those factors, why not? I’m sure the captains and flight attendants would love to have your company on the actual holidays.
Meghan Coyle:
Yes. And a hearty, “happy Thanksgiving” is always welcome when you have to work the holiday. And just think of the money and potential annoyances you’re saving by traveling the day of. If you can swing it, why not?
Sean Pyles:
All right. Well, our series continues next week. Meghan, what have you got in store for episode three?
Meghan Coyle:
Well, Sean, I would venture a guess that the biggest worry people have about traveling for the holidays is probably a flight getting canceled or maybe a road getting iced over so you can’t get somewhere. But a close second would be your luggage, all your stuff, the stuff you’d need to look and feel great at your destination, not to mention the presents. You lose that and, well, sad face. We’re going to have some tips and advice for getting your stuff from one place to another without losing your mind or your money.
Jessie Beck:
Once you add on the cost of paying to have a carry-on bag on that basic economy ticket, you might as well just get an economy ticket and be able to be a little bit more flexible. I think that’s the most important thing for me. If I did have to make a last-minute change, I can do that penalty-free.
Sean Pyles:
For now, that’s all we have for this episode. Do you have a money question of your own? Turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
Meghan Coyle:
This episode was produced by Tess Vigeland, Sean helped with editing, Claire Tsosie helped with fact-checking, and a big thank you to NerdWallet’s editors for all their help.
Sean Pyles:
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.
Meghan Coyle:
And with that said, until next time, turn to the Nerds.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
A certified financial planner offers a listener actionable advice to help him save for a big move while maintaining financial stability.
How much should you save before you move to a new city? How can you reach your savings goals while also spending on your lifestyle? Recording in-person from a studio in Chicago, host Sean Pyles sits down with Magda Doemeny, a certified financial planner with NerdWallet Advisors, to host an actual financial planning session with a listener. Jim, a 36-year-old nonprofit worker, joins them to share his aspirations of moving to a higher cost-of-living area without a job lined up. Magda advises him on how much money in living expenses he should consider saving before making the move, the practicality of high-yield savings accounts, and the benefits and limitations of using a Roth IRA for a down payment, among other practical strategies for reaching his goals while maintaining financial stability.
NerdWallet Advisory LLC, dba NerdWallet Advisors, is an SEC-registered investment advisor and wholly owned subsidiary of NerdWallet Inc. The advice provided in this episode of Smart Money was for illustrative purposes only and not intended as financial or investment advice specific to your personal facts or circumstances.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius Nerds. I’m Sean Pyles. This episode, we’re continuing our series where we’re doing something pretty unusual for Smart Money. At the request of NerdWallet’s brilliant legal team, we say often and explicitly that we are not here to give you individual personal finance advice. What we talk about is food for thought, for educational and entertainment purposes only. But this episode, our listener is getting specific personal finance advice for their money question.
A few weeks ago, you may remember that we put out a call inviting you, dear listener, to contact us if you wanted some free financial planning and allow us to record that planning session. Lots of you wrote in and today we’re going to hear from one of you. We’re coming to you live from a studio in Chicago and we’ll be talking in person with a listener. But before we get into that, I’d like to bring back Magda Doemeny. She’s a certified financial planner with NerdWallet Advisors. One thing I want to be clear about is that Magda and NerdWallet Advisors are a distinct platform from NerdWallet. Magda will give our listeners some specific individual personal finance advice and that advice will be given on behalf of NerdWallet Advisors, not NerdWallet. Also, in exchange for coming on and talking with us, our listeners are receiving a free one-year membership to the NerdWallet Advisors platform. Magda, welcome back to Smart Money.
Magda Doemeny:
Thanks, Sean.
Sean Pyles:
So we’ve talked with you before, but can you give us a refresher on who you are and what the NerdWallet Advisors platform is?
Magda Doemeny:
Yeah. So I’m an advisor with NerdWallet Advisors, and what we offer is affordable financial planning memberships with access to a certified financial planner like me at a low monthly cost. What we do is review your finances as a whole, and ultimately, create a financial plan that has action items in there that are pretty bite-sized for you to break down. And then we’ll check in with you periodically throughout the year. And ultimately, if you ever have a question, you can always schedule a call and/or send us a note, and you really just have unlimited access to us.
Sean Pyles:
Great. So a lot of people have not gone through the financial planning process before. What’s something that people might not expect about going through this?
Magda Doemeny:
I think the thing that folks aren’t usually ready for is the commitment aspect of this. Kind of like if you decide to update your health and fitness regimen, going to the gym or going to the doctor, if that’s all that you’re committing to, that’s not really going to change your life. And so what we really want is for folks to understand that we can break this into bite-sized pieces so that it is one day and one month at a time so it’s a lot less daunting. But it does take commitment for you to make sure you want to go through this process.
Sean Pyles:
It’s about the small regular actions beyond one big meeting with you.
Magda Doemeny:
Sean Pyles:
All right. Well, let’s get to some financial advising in a moment, our financial planning session with a listener here in Chicago. Stay with us. Let’s get to the guest star for this episode. Jim is a Smart Money listener who is 36 and lives in Milwaukee, Wisconsin. And he’s here with us now in studio. Jim, welcome to Smart Money.
Thanks for having me.
Sean Pyles:
So tell us a little bit about yourself. What do you do for work? What are your hobbies, all that sort of stuff.
I work for a nonprofit. I manage grants that go out to education programs. I’m a former journalist and middle school math teacher, actually. And for fun, I play a sport. I play a sport called hurling, not curling on the ice with the brooms. Hurling is like Irish lacrosse. And I love, love, love to kayak for the very few number of weeks that it’s fun and comfortable to do that and the weather’s nice.
Sean Pyles:
I bet. Okay. So how would you describe your current mode of managing your finances? Are you active? Are you passive? Somewhere in between?
I would say extremely active.
Sean Pyles:
Sean Pyles:
What does that mean for you?
I track all of my expenses. I rebalance my accounts as best as I can about every quarter. I’m very, very, very cognizant of where my money’s going and if it’s doing the most that I can make it.
Sean Pyles:
Great. And that’s why you’re a Smart Money listener.
That’s right.
Sean Pyles:
So how would you very broadly describe your finances right now?
I would say stable, but maybe precarious. So I make enough to do what I’m doing now, but I don’t make enough to be working towards some other really big goals. So what I’m really interested in learning is what kind of financial risks might be worth it for me to take so that I can pursue some big goals that I have.
Sean Pyles:
Okay. Well, tell us about your current financial goals. From what I understand, you’re hoping to move from Milwaukee to San Diego potentially, and you’re considering even maybe dipping into your retirement accounts to fund that move. Talk with us about that.
That’s right. I am a Midwestern boy, born and bred. I was born in Chicago. I absolutely love the Midwest and I absolutely love Milwaukee. Everyone should visit. It’s a wonderful place to live. It’s affordable, it’s got this gorgeous lake. It’s got friendly people, and I am so sick of winter. I never want to be cold again for the rest of my life if I can avoid it. And while I’m pretty sure that if I did move to a warmer place, I’d eventually see that maybe the grass isn’t greener, but I would feel a lot more peace of mind if I’d given it a shot. So I’ve been on the job hunt for a while to try and make that feasible. And San Diego is kind of my prime target, but it’s been slow-going.
And I’ve had a couple of close calls and I’ve got some traction right now with a few things, but it’s an expensive place. I don’t have a lot of connections, and I’ve put a lot of time in and I’m getting older and I’d like to start a family and buy a house one day and stuff like that. So I’m trying to weigh how important is it to me based on my financial security, if it’s a risk that’s wise to take.
Sean Pyles:
Right. Well, making such a jump, moving to a new place and maybe even using retirement funds to make that move is pretty risky. So how are you thinking about the tradeoffs of the risks and potential rewards for your life?
Absolutely. So I have a Roth IRA that I’ve been saving and I’d originally used it as a way to save for a down payment. I have a really generous retirement plan through my work when I put 5% in, another 9% comes back. So about 14% of my pay is going into my retirement fund through my employer. So extra stuff has been going into this Roth IRA that I’ve had for a couple of years. And it’s because I’ve done some research and I know that you can use a Roth IRA without paying penalties and without paying taxes. And even on the earnings of that, I know that there’s a limit that you can use even toward a down payment on a first home.
So I’ve been saving for that, but because I really, really, really want to make this move and I haven’t gotten a job to do that yet, I would feel more secure and not like I’m going to deplete all my emergency funds and all that if I knew that it wasn’t a terrible idea for me to tap into that Roth. And I might even be willing to go without a job and work service industry things just to get out there, and maybe that would advance the job hunt faster. But I don’t want to do that if I think that that’s going to put me in an unwise situation. I would say that I’m very, very cautious about my finances because I took on a lot of student loan debt in my undergraduate degree, so I never want to be in that position again. And being stable financially is really, really important to me.
Sean Pyles:
Right. Okay. And so you’re hoping to get maybe a second opinion to bounce some ideas off of and see if this isn’t so crazy an idea?
I would love someone to give me permission to do something a little scary.
Sean Pyles:
Okay. Well, have you ever used a financial advisor before?
Sean Pyles:
Okay. Well, Jim, I know you have been sitting here across from Magda for a little while, but let me officially introduce you to each other. Jim, Magda, Magda, Jim.
Magda Doemeny:
Sean Pyles:
So Magda, I’m curious if you have any initial thoughts about Jim’s financial situation based on what we just talked about?
Magda Doemeny:
Yeah, I think this is not uncommon. There are folks who want somebody to talk to them about where they are financially today and what kinds of decisions they can make, whether it be moving across the country or halfway across the country, buying a home, how much can they actually afford when it’s so expensive? Can they actually afford a little bit more than they think? So when I look at your situation, I think you’re doing all the right things by asking all of these questions. And what it really boils down to is what do we do? Do we actually make that move with your current financial situation or not? I think I am a firm believer that your retirement is intended for retirement and we want to do everything in our power not to touch that mostly because we can’t undo it.
Once we remove the funds from a retirement account, you can’t really put them back. And there’s so many tax benefits specifically to those types of accounts. So I want to talk a little bit more about the details of what your income is, talk about those expenses, talk about other ways we could increase income, if at all. Because when we do something big like this, I want to plan for it. And that means not taking the resources necessarily that we have and seeing what we can do with it, but instead saying, I’m going to do this in X amount of time. How do I get myself there? What do I do now?
Sean Pyles:
Let’s look into some more specifics. I know when you do financial planning, you need some specific numbers. You’re looking for balances of savings accounts. Let’s really dive into that nitty-gritty. So when it comes to something like a savings fund for a move, what would you maybe want to see from Jim here? Or what other options might there be for Jim to make this move if there isn’t a lot of liquid cash available?
Magda Doemeny:
I think if you are going to be making a move without a job, I want at least a year’s worth of expenses. I really want a year’s worth of expenses where you’re going, not where you are today, right? Because what we want to know is if it takes you a year to find a job that can pay you somewhat near your cost of living, I don’t want you to have to incur high interest debt, which is what could happen, right? Ultimately, if you need to pay for something, it goes on a credit card and if there’s not cash to support it, that stays there. You get a rolling balance, and that could just be for your day-to-day expenses potentially. So we need ideally at least a year if you’re quitting your job and moving.
Sean Pyles:
And so Jim, what is your emergency savings like right now, or your move savings fund? Do you have anything like that put aside?
I do. So my emergency fund right now, I’ve been aiming to have about six months and I don’t have that yet. So I’d say right now I just wanted a big trip, but I’ve gotten reimbursed for my company. So I would say I’ve got something like 6,000 in emergency savings and my low cost of living in Milwaukee, I’d say that would just barely cover three months.
Sean Pyles:
Okay. And are you putting aside a certain amount monthly to build that up or how are you thinking about increasing your emergency savings?
Yeah, I save about $850 a month, although I’ve had a couple of big expenses lately and I have a car that I love, but she is at the end of her rope. She’s put in a good hard life and she deserves a rest. So knowing that I have this car that serves me fine now, but would absolutely not make a cross country move. I’ve been delaying doing anything about the car in hopes that I might be able to move somewhere where that’s not a necessity and that would save me a lot of money, but I don’t know those circumstances until I’ve made that change.
Sean Pyles:
Okay. So talk with us a little bit about the car. Are you willing to take on some debt? I know you mentioned that you’re not really keen on debt at this point after all of your student loans. It seems like it might be an inevitability unless you really prioritize living somewhere that’s more central, which could mean higher rent payment, especially in a more expensive place like San Diego.
Sure. I mean, of course if I bought a car I would absolutely need a car loan, but my bigger more important priority is the move. So if I could move somewhere where I didn’t need a car, I would happily forgo a car so that I could pursue that.
Sean Pyles:
Okay. Well, Magda happens to live in San Diego. Can you speak a little bit about how walkable certain parts might be? What are your thoughts around the necessity of a car in that city?
Magda Doemeny:
Yeah. I’ve been there for just over a year now, and I live more in the suburbs since I have two kids. I think it’s possible, but generally California is not very public transportation friendly, I’d say, born and raised in California. So part of what’s fun about California is all the places you can go. Beach, mountains and those things will need a car. And so outside of you moving there to restrict your life to your area, you can expect to need a car to get places which is $100 Lyft here or something like that. I mean, it costs me $50 here to the airport. So you’ll probably need a car.
Sean Pyles:
So I’d like to hear your thoughts around Jim’s savings in terms of emergency savings and savings for a move like this. Do you have any tips for how he could potentially increase the cash that he has to make a move like this possible on the timeline that you have? Do you have a set timeline, by the way? Do you want to move within a year?
Yesterday.
Sean Pyles:
Yesterday. Yeah. So as soon as possible, what do you think are some good ways to accelerate savings?
Magda Doemeny:
Yeah. So I have a little bit of context on your situation, which includes how much you have in retirement savings, which for your age is actually pretty good relative to how much your income is. And this is more something that we use to gauge just general progression around how much you’re saving for retirement, but it is based on your income and your living expenses because it means you’ve saved enough to cover your current lifestyle. But with a move to San Diego, the assumption would be you’d have to increase your income and increase your savings if that was your permanent home forever.
If you end up moving back to Milwaukee, great, then you’re saving higher. So because of that, I think something that I could suggest is one, we want to take a look at your expenses in general. It sounds like you track them pretty closely, which is great, but we can always, if we set a goal which is I need to save X dollars, which for you would definitely be six months, but if you didn’t have an income, I’d want it to be a year, and we can work backwards from that number. One thing I could suggest is that we actually decrease some of your retirement contributions, but I want to learn a little bit more about your match. So in order to get that 9% match, is there a minimum contribution you have to put in to get the 9% match?
So we are a unionized office, so there’s actually two employer contributions. So when I put in 5%, that gets matched to 3.5%, but then there’s a 5.5% that is not a match, it’s just put in. But my 5% that I put in now is necessary to get the full 9%. Yeah.
Magda Doemeny:
Sean Pyles:
And this is 5% on what salary?
Well, I just got a raise, so about 74.
Sean Pyles:
Okay. Congrats on the raise, by the way.
Thank you. Thank you.
Sean Pyles:
And so you mentioned that Jim was in a pretty solid place in terms of his age for retirement savings. What was that balance and how do you think about these benchmarks? Because there are certain numbers people see around, okay, one time is your salary, one you’re 30, that sort of thing. So can you provide some context and details around Jim’s situation for that?
Magda Doemeny:
Yeah. So correct me if I’m wrong, Jim, but I have that in terms of retirement savings, about 125,000 or so, which is spread between a Roth IRA and a 403(b) at your employer. So that’s about 97,000 in one and 26,000 in the other.
It’s like 120 in the employer and then another 27 or so in my Roth.
Magda Doemeny:
Oh, okay. So 120.
Sean Pyles:
Which just for context will put you ahead of the vast majority of people in this country. So even though these benchmarks are very aggressive, one time your salary at 30 is impossible for many, many people, you’re doing fantastic in that regard. So you should be proud of that.
Magda Doemeny:
Older me will thank me, but younger me really wants to be warm.
Magda Doemeny:
Right. And that’s true. So that I tend to use, there’s a number of different ways you can just figure out if you’re on or off track. I tend to not use the very detailed method until you’re really close to retirement because then we’re actually making a decision to cut off your salary, which the best ways for you to increase your saving is really only two ways. It’s increase your income or decrease your spending. And so for you, I think that your retirement savings is great, which is why potentially we could trim back a little bit, but I really hate giving away free money, so I don’t know that I’d want to do that. So I would want to prioritize two things. The first one would be is there any other way we can increase your income, whether it’s gig work or contracting at what you do? If there’s a way for you, I think you had mentioned at some point that you have a journalism background. Is there a way you can start picking up some writing?
Magda Doemeny:
Something like that.
Fun fact about me, I’m a giant nerd and I actually am a seasonal tax preparer.
Magda Doemeny:
So I’ve done that the last couple of years. People look at me like, what is wrong with you that you could do this for fun? But I love it. But part of the reason why I haven’t spent more time on side gig work, even though I have plenty of time for it, is because I’ve been using that time for the job hunt. So I’ve been trying to spend my time making connections and networking and finding roles that I might want to do that would increase my income and my full-time job. So it’s tricky to be able to find the time to do that when you’re working at night as well.
Magda Doemeny:
And what’s the target salary range you’re looking at, where are you finding it?
I would love something in maybe the 110s, but I think I would accept a role that would be anything from 95 on up.
Magda Doemeny:
Sean Pyles:
Okay. Which sort of specific jobs are you looking for?
That’s a great question. So my background is in nonprofits, that’s where I have the most experience and I think it’s most likely where I’d go. One reason why I’ve stayed in nonprofits so long is not only do I love it and it is very meaningful work and I work with good people and I like the causes that I work for, but I was on the public service loan forgiveness plan, so about half of my student debt was forgiven in April because I had worked for a nonprofit for 10 years. So now that that’s happened, the financial incentive isn’t there for me to stay in nonprofits. So I’m very open to going into something else. For a while, I really like the analytical parts of my job and I take classes in SQL and R and Python for fun.
But because I’m sort of in a middle career, it’s tricky to find a role where I’m not taking a low step, a step downward, and I’ve got a lot of ad hoc do-it-yourself learning that is a little trickier to sell, especially in tech right now, which seems like it’s had a lot of layoffs. So I have a very, very broad net, which has its pros and cons. It means I’d be willing to do a lot of things, but then it’s really hard to know how to network or find something. So I’d say right now I’ve been looking in largely government jobs.
Magda Doemeny:
And I will say that you ultimately want to look at what your goal is here, which if it is to increase your income. We as financial planners will tell people all the time, you can stop working to go and get a degree if that’s going to increase your income over time. And so even you mentioned taking a step down from maybe career level where you are, but ultimately, if you’re stepping into an industry that will 2 to 3x your salary, that might not be a bad decision, especially if some of these positions being in the engineering tech space, their entry level positions could be not too far below your current one and sure it might be below, but it’s probably remote, which is great.
And you’ll still be a W-2 employee, which we care a lot about. Not that you can’t be a contractor, but that comes with benefits when it comes to being fully remote. And so that could be something that you shouldn’t shy away from if you can actually get into that industry and then start to really progress your career a lot higher versus in one that might be a little more stagnant.
I have no problem with that and applying elsewhere. And I love learning, but I have such a hate-hate relationship with the higher ed industrial complex. And the thought of taking on more student loan debt makes me want to jump out a window. It’s not to say that I would never do it, but it would be very hard to maintain the feeling that this is…
Magda Doemeny:
Really going to help you.
Right. Really going to help me. That it’s not going to cause a lot of the same kind of anxiety that it’s caused me for the past 18 years.
Magda Doemeny:
And could you get into the industry without additional education?
I’d like to think so.
Magda Doemeny:
Yeah. But that’s where you’re struggling.
People keep saying that I can, but they haven’t given me an offer yet.
Sean Pyles:
Well, I want to turn to talking about a different type of debt, home debt, mortgage debt. You’re hoping to become a homeowner at some point. How have you begun to plan for that?
Limited. So I used to be married. I got divorced last year and I had been using the Roth IRA combined with my partner. We were saving together in different vehicles, but the Roth was a way where I could save this money. I had worked in a lot of other sketchy nonprofits before that I didn’t really trust how they were managing their finances. So I did my retirement savings myself through my Roth. So after doing some research, I learned that with a Roth IRA, as long as it’s at least five years old, you can use all the contributions toward whatever you want without a penalty or taxes and even 10,000 of the earnings for first-time home purchase. So the way that we were saving for a home together was she was using her savings vehicle and I was using the Roth IRA as my savings vehicle.
So that’s been there. I’m not contributing to that Roth right now because I’ve got other priorities in my budget, but it’s been there as well. When it’s time for a down payment, I’ll draw from that. But I don’t intend to buy property anywhere until I have proven to myself that whether or not living somewhere with a really, really wonderful miraculous climate like San Diego would be worth it. So I guess my savings is in the Roth IRA and that’s part of why I’m interested in talking today is like, well, I don’t think buying a home is in the very near future and I don’t think it will ever feel like something that I would feel good about until I made this other change, if that makes sense.
Magda Doemeny:
Yeah. And that absolutely makes sense. I want to weigh, I think it’s okay to use a Roth IRA for something that I would view as an investment. Not to say that you moving to San Diego and bettering your life and the way that it would better your life isn’t an investment. But the problem with doing it not into an asset like a house is that if you decide that this isn’t for you and you don’t like it and you move back, it is money that was depleted that didn’t have the potential to turn into something more. And so for something like living expenses, that is something that I’d prefer we save for outside in some capacity versus depleting a retirement account to use for effectively an emergency fund really is what we would be using it for. And I do think that we could, ultimately, find a way to do that.
We would just probably extend your timeline a bit, but you had mentioned that you’re saving typically around 880 or so a month in a year’s time, and especially if there’s any way we can even trim back expenses even more, that can be a good chunk of money that we can set aside to say, this is your getting to San Diego. I know a year might be too long of a timeline, so we could figure out how to adjust that if we can figure out how to make more money and then we can really hoard a lot of cash that we can use for a move.
Music to my ears, making more money.
Sean Pyles:
So I want to turn to specific advice on an even monthly basis potentially for Jim in a moment. But I also have a question around accounts because we’re NerdWallet, I’m all about getting people the best products for their goals. What sort of savings account are you using? Do you have a high-yield savings account? Talk with me about that.
I chose my savings account based on NerdWallet’s recommendations.
Sean Pyles:
And it is high-yield?
It is high-yield. [inaudible 00:24:29] income. Yeah. So I think right now my savings account is at 4.6%.
Sean Pyles:
Okay, great. So what do you think about trimming expenses to be able to save more? Do you have anything in mind that you think, okay, that’d be an easy expense to trim right off the bat?
Honestly, no. So sure, I go out often. I am a pretty extroverted person and it’s been very good for just my mood to be able to see a lot of my friends. I don’t always have to spend money when I go out, but it’s pretty tricky to go out into a bar or a restaurant with friends and not spend some money. So I can imagine if I was really disciplined I could shave a couple of hundred dollars a month off of that. But like I said about my car, I feel like anything that I would save by doing that would just get gobbled up when this car, ultimately, crosses the Rainbow Bridge.
Magda Doemeny:
And it is something that we want to plan for when we look at cash. We don’t want anyone to have too much cash. I don’t know if that’s crazy to say out loud, but cash is not great. Cash is for specific purposes, which is your emergency fund and any short-term goals that you have, your car being one of them. So we would want to pre-fund whatever we think a down payment would be, so you’d want to do some research on what car you would want, and then we’d figure out roughly how much we’d want to put down for something like that and that we’d want to set aside in cash. So if you’re saying that you don’t think that you could trim expenses too much, which is fair, I mean, I don’t want to say go live with 10 roommates and find a way to never go out and enjoy life. That’s not what your finances are all about.
It’s about meeting you where you are within the means of getting to your goals. I do think the next priority would have to be focusing on increasing income, which it sounds like you’re doing. But then my goal for you would be that we wouldn’t move to San Diego until we at least knew where your income could get. Because if we find out that your income is 110 or 120, that’s very different than if we find out your income would stay at 75, which we know for certain…
Would not.
Magda Doemeny:
Would not cut it.
Would not be possible.
Magda Doemeny:
Yeah, because I mean right now your housing expense is $1,000 a month, correct?
Which is incredible.
Magda Doemeny:
It’s incredible. And no roommates, I assume.
That’s right.
Magda Doemeny:
Yeah. So I think in San Diego I would guess that you could do $1,000 with maybe two or three roommates or something. I don’t know if I’m being extreme. And so right now, based on your ability to maintain your contributions to retirement, which I’d love to do. Like I said, you’re a little ahead of the game, so if you change jobs and they didn’t have this incredible match, I think I’d be okay with you trimming down your retirement contributions and we could reallocate those funds to maybe a cash account or just a standard investment account so that you can liquidate that anytime. There could be penalties associated with if you’ve made money on them, but no penalty, that would just be taxes. So we could reallocate funds that we could say this is towards building towards a future home or something like that. So I would be okay with that, but I think we really need to figure out what your next job is going to be.
You and me both. Yeah.
Magda Doemeny:
Sean Pyles:
Well, that brings me to the next part of this conversation, the actual specific recommendations, Magda, that you would have for Jim. So when you’re thinking about a financial planning session like we’re having now and this ongoing relationship that you will have with Jim going forward, what would you say is maybe the first best thing that Jim should do to get to that goal? Moving to San Diego, hopefully, within a year, maybe two years.
Magda Doemeny:
I think the first thing would be that we get a better idea of what the cost is actually going to be in San Diego. So that means really doing some research and finding real places on rent. We could talk about the other parts of the cost of living, obviously, but there’s ways to do research and just find out how much is it going to cost to buy your groceries down there. And then accommodating for lifestyle change of just going out and about potentially a lot more in a new city. So I’d want to get a better handle on that so then we could figure out how much do you need to make to support that lifestyle. I also want to make sure we figure out how much we need for a down payment on a car. If we need one, which I think in San Diego you would, I wouldn’t want to anchor on not needing a car because if you do, we got to find that money somewhere once we’ve already done that.
Sean Pyles:
I imagine it’d be cheaper to buy a car in Wisconsin than San Diego.
Magda Doemeny:
And driving it all the way through. I don’t know if there’s income tax you guys…
Magda Doemeny:
Or do you guys have sales tax there?
Magda Doemeny:
Yeah. Okay. So I’m sure it’s probably cheaper than California. So I think those would be the first few things, and then we would want to figure out how to create an actual budget for you once you moved so that we could decide how much can you be spending while you’re there on non-housing so that we don’t go too far over budget. And then we would figure out if we need to, how much we can contribute to your retirement once you started your job. My biggest thing that I actually haven’t mentioned is moving somewhere without a job. One of the most important things that you’re losing is your healthcare. And I don’t know about other states, but being in California, it’s not cheap. And this can be several hundred dollars a month just so that you have healthcare coverage, which you have to have. And so that’s another reason why it’s just important for you to have some source of employment, whether it be that they provide it or you have an income to pay for the healthcare. So we’d want to make sure that got set up as well.
Sean Pyles:
Accomplishing financial goals. One thing Magda and I talked about before this recording is about making changes. It’s like going to therapy. You don’t just go for the conversation. It’s about having some proactive differences that you’re going to make in your day-to-day life. Are you prepared to make some significant changes to maybe how you manage your income and expenses, maybe working a little bit more to be able to get to where you want to be in a year?
I very much am. The challenge is making the changes that are going to yield the biggest benefit. So like I mentioned, I have no problem working two jobs. I’ve done that for a lot of my career, but lately I’ve been using that second job time to find a different first job. And so it’s hard to know what the payoff is, like where’s the most lucrative place to spend my time. That also aligns with my goals and also takes into account just how much time I’ve already put in. I don’t want to look too much at all this time that I’ve worked on it, but the fact that I’ve put so much time in and it’s still this important to me kind of makes me want to look more boldly at what kind of risks am I really willing to take.
Sean Pyles:
Well, Jim, do you have any other specific questions for us that you haven’t asked yet?
Anybody’s selling a car for really cheap?
Sean Pyles:
Unfortunately, no. Not here, not me. Great. Well, Magda, let’s turn to what some listeners can get from this conversation. At a high level, what do you see in Jim’s situation that might be applicable to our audience?
Magda Doemeny:
I think it’s very common for people to not really understand exactly what their money can do for them. And frankly, even as a CFP, I find this to be the case sometimes too, where I want to take risks, which is taboo, but sometimes I want to do that and I know folks want to be able to stretch their dollars. It is possible to be too conservative sometimes. I want to encourage folks to take risks sometimes that are something you’ve at least thought through and have a plan for. I know I’ve said plan a thousand times right now, but that’s really what this boils down to is when you want to take a risk, you just have to do the research to put it together so that you have a plan. Because too many times what we see is I might talk to somebody on the back end of that non-existent plan and I say, well, let’s talk about how you got here.
And it comes along with such and such was going on and I just didn’t want to do it anymore, and I did X and now I’m here. And that’s not always the case for everybody, but if you have a plan and a direction, it also helps you decide when it’s not working. You get there and you’re bleeding cash and you say, wow, I can only make it here six months. So you have an exit point to say, I can only spend this much money in six months. Now I need to go back to my cheaper lifestyle. If we don’t at least plan things through, then we don’t know our entry, our exit, and we don’t know when things are really turning in the wrong direction. I know that’s more of a negative way of thinking about it, but the positive spin would be true as well.
Like I mentioned, when you want to make a change, I want people to be empowered by that change. The same is true if you decide to go back to school and get an education. I want you to know that this is bettering your future, and that’s why you’re willing to take the risk and slow down your career temporarily to speed it back up. The same is true for making this move. I want you to get there and enjoy it and not have money be the thing that’s just constantly in your background saying like, oh, is this a bad decision? I can’t afford it. And so I think that’s pretty applicable to most people who want to take risks.
Sean Pyles:
Great. Well, Jim, I hope this was helpful. Keep us posted on how things are going for you, and thank you so much for coming on Smart Money and talking with us.
This is fantastic. Thank you so much.
Sean Pyles:
Great. And, Magda, thanks as always for sharing your insights.
Magda Doemeny:
Of course. Happy to be here.
Sean Pyles:
And that’s all we have for this episode. Remember, listener, that we are here to answer your money questions. So turn to the Nerds and call or text us with your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Also visit nerdwallet.com/podcast for more info on this episode. And remember that you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes. To learn more about NerdWallet advisors, go to https://nerdwalletadvisors.com/smart-money.
Here’s our brief disclaimer. I am not a financial or investment advisor. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
This episode was produced by Tess Vigeland, Cody Gough, and myself. And a special thank you to Magda Doemeny, Georgia McIntyre, and Emily Canedo, and a big thank you to NerdWallet’s editors for all their help. And with that said, until next time, turn to the Nerds.
NerdWallet Advisory LLC, dba NerdWallet Advisors, is an SEC-registered investment advisor and wholly owned subsidiary of NerdWallet Inc. The advice provided in this episode of Smart Money was for illustrative purposes only and not intended as financial or investment advice specific to your personal facts or circumstances.
At one point during the first and, possibly, only debate between the two presidential hopefuls, Vice President Kamala Harris said to former President Donald Trump, “You’re not running against Joe Biden. You’re running against me.”
That statement was clear to anyone watching.
The energy of Tuesday night’s debate, which was hosted by ABC News in Philadelphia, starkly contrasted the June debate in which Trump faced off against President Joe Biden. The one that led to Biden stepping down and Harris stepping up to be the democratic candidate.
Harris and Trump clashed over a number of policy proposals including the economy, abortion, climate change, energy, immigration and foreign policy.
Unlike during the CNN-hosted debate in June, ABC News hosts David Muir and Linsey Davis fact checked statements live — including refuting Trump’s false claim that in some states, parents can elect to kill their baby after birth; a false conspiracy theory that immigrants in Springfield, Ohio are eating people’s pets; and another false claim that Democrats favor abortion in the ninth month of pregnancy. Muir and Davis weren’t actively fact checking Kamala Harris much, but they did question why she has changed her positions on fracking and health care — Harris denied that her views have substantially changed.
Speaking of policy positions, the candidates’ plans for the economy were first up, but didn’t get much consistent airtime thereafter. Trump attacked the Biden-Harris administration on inflation before repeatedly bringing the focus to his views on immigration. Meanwhile, Harris doubled down on much of what she’s said on the campaign trail about being raised “a middle class kid”; her Opportunity Economy; and the multiple economic assessments that project Trump’s plans would ignite inflation.
Here are some other takeaways from the debate:
Harris said Trump would impose a sales tax (that she’s calling a “Trump sales tax”) on everyday goods. Trump said it was an incorrect statement. What Harris is likely referring to is Trump’s proposal to impose across-the-board tariffs, which would likely increase the cost of imported goods to America. Trump defended his proposals.
Harris didn’t respond when Trump pressed her on why the Biden Administration did not remove the tariffs he put in place during his presidency.
Trump has long tried to get rid of the Affordable Care Act, but said he doesn’t have a health care plan to replace it. However, he does have “concepts of a plan.”
Harris slammed Trump on his views on abortion and that Roe v. Wade was overturned while he was president. Trump said abortion was best left up to the states. Harris said, as president, she would sign a bill that Congress passes to restore abortion rights.
It was the debate the Harris campaign needed after recent polling: The New York Times/Siena College that was released on Sunday showed Trump leads Harris 48% to 47% nationally (Sept. 3-6). In most swing states (Arizona, Georgia, Nevada and North Carolina), the candidates are tied at 48% each. In Pennsylvania, Harris leads Trump 49% to 48%.
By midnight on the east coast, the Polymarket, a prediction market platform, projected a 96% chance that upcoming polls will show Harris won the debate.