My Financial Toolbox: The Nuts and Bolts of Managing Your Money

by Harry Sit

Some people think they can take the 30-year mortgage for lower monthly payments and invest the difference for a higher return. While this may work out eventually, it takes a long time to break even, because the interest rate on the entire loan is higher in a 30-year mortgage.

My favorite place for refinancing a mortgage is First Internet Bank of Indiana (www.firstib.com, “FirstIB”). FirstIB is a bank in Indianapolis. The loan officers there use the phone, email, and the Internet to originate loans.

You can also try getting a quote from Better Mortgage (better.com). Although I don’t have any personal experience with them, I read that others received good rates from Better Mortgage on their refinance.

While you’re at it, you can also place a security freeze with ChexSystems by Googling “ChexSystems freeze.” Many banks and credit unions check with ChexSystems when they receive an application for a new bank account. If you have a security freeze with ChexSystems, identity thieves won’t be able to open bank accounts in your name at those banks and credit unions. When you need to open a new bank account yourself, you can temporarily unfreeze with ChexSystems. It goes back on freeze again when you’re done. Freezing and unfreezing with ChexSystems is also free.

Emergency Roadside Assistance provides towing and lockout services. The cost for this coverage through my auto insurance is much less than AAA membership fees.

This limit is separate from the contribution limit for a 401(k) or 403(b) plan.

Many grandparents wait until the money is no longer counted in the final year’s financial aid application before they pay out of their 529 plan account for their grandkid.

They consider only the quality of the investment options, not the state tax benefits. The

following plans received a Gold rating from Morningstar in 2019: - Illinois Bright Start College Savings Plan - Virginia Invest529 Plan - Utah my529 Plan - California ScholarShare College Savings Plan

Although both 0.1% and 1% look like small numbers, paying 1% versus 0.1% makes a big difference over one’s lifetime. If you invest $10,000 a year for 40 years, and you pay 1% a year versus 0.1% a year, all else being equal, you’ll have 20% less at the end of 40 years.

:(

Similar to target date funds, when you’re not sure whether an age-based portfolio is a good choice for you in a 529 plan, it’s a good choice for you.

Tax-loss harvesting is useful, but its effect is often oversold. It’s more useful when you keep adding a large amount of new money to your taxable accounts relative to the size of your existing portfolio. This is the case for new investors. After some years, as your portfolio grows in size, the new additions become relatively smaller. This makes tax-loss harvesting less effective.

Help you clean up a mess (often caused by a financial advisor of the wrong type).