Current Events > Does anyone here use a financial advisor?

(+) Yeah! (+)

Currently in the middle of figuring out what to do with my money. I feel like financial advisors are mostly for rich people who are too lazy to invest their own money, not answer my simple questions. Maybe I am wrong though idk. Anyways if anyone here is smart financially I'd appreciate your input! Planning on refinishing my kitchen, and adding a patio in my backyard. Looking to get an estimate on my kitchen soon, but a friend just remodeled his for about $10k so that has been my working price as of now.

Kitchen ~$10k
Patio with furniture + new grill/etc. ~$5-7k

I have about $80k equity in my house that I could take a Home equity loan from at about 3.5% in either a 5 or 10 year term. I have $30k in savings.

My wife still has $10k in student loan debt at 7%. Payed it down to $10k and have been waiting in case there is legislation for forgive $10k. My student loans are paid off. Currently no car payments or credit card debt.

Her salary is $45k before taxes. Mine is $60k before taxes. We have $70k left on our mortgage.

Her car only has 80k miles on it. Mine has 190k, but I drive less than like 50 miles a week, and most of those trips are 2-4 miles at a time. I can work from home too so if my car would die it wouldn't be the end of the world.

My thought process was to take $10k out in a home equity loan. To cover the kitchen. Pay for the patio in cash so my payments aren't as high. But with the recent market downturn I started thinking, should I just pay for everything with a loan, and instead move the savings I would have spent into an ETF? Which, assuming in either 5 or 10 year term the market would swing back I would most likely out earn the interest on the loan if not more since I'd be buying in the dip? With the current rate of inflation I hate seeing my money just sit in savings.

Another thought I had was with loan forgiveness discussion not seemingly going anywhere, should I take an additional $10k in equity to essentially just take my wife's student loans from 7% interest down to 3.5%?

I am pretty conservative when it comes to personal finances. Generally just err on the side of caution and put money away. Yet, with current inflation it seems like this is negative and I don't want to be screwing up our future financial freedom by being too cautious now.

tl;dr should I use home equity loans or savings to pay for housing projects?

I just ask my dad if it's a bad idea.

Tbh I should try that first.

He usually tells me to ask his mom though.

I have one and it's worth the investment, especially if you are planning long term goals

How much of a fee do they take?

If you want advice, I'd recommend going to r/Personalfinance. They're usually better equipped for these kinds of questions.

One thing I do know, is you can buy 10k in I-Bonds as long as you don't plan on using it for 1 year. You're currently getting a guaranteed 9.62% rate on it until october. Once one year passes you can cash out if you need to and lose the last 3 months of interest. But this vastly beats savings rates from banks.

Im in banking and investments though this is not official advice and merely my opinion based off limited info.

I would use the loan and keep your savings, enough for emergencies and the rest invested. I think given a standard time horizon of 3+ years you could easily realize a return on investment greater than the rate you are paying on the equity loan.

Im always hesitant to tell clients to balance transfer their student loans due to unforeseen benefits. Id leave it alone unless the savings are significant enough to you or a budget issue arises.

badjay posted...

If you want advice, I'd recommend going to r/Personalfinance. They're usually better equipped for these kinds of questions.

One thing I do know, is you can buy 10k in I-Bonds as long as you don't plan on using it for 1 year. You're currently getting a guaranteed 9.62% rate on it until october. Once one year passes you can cash out if you need to and lose the last 3 months of interest. But this vastly beats savings rates from banks.

Duh. I just don't really use reddit. Hope there isn't a karma(?) requirement for that board.

CapnMuffin posted...

Im in banking and investments though this is not official advice and merely my opinion based off limited info.

I would use the loan and keep your savings, enough for emergencies and the rest invested. I think given a standard time horizon of 3+ years you could easily realize a return on investment greater than the rate you are paying on the equity loan.

Im not a tax advisor but often you can claim interest paid on home equity as a deduction if used for primary home improvement. Something to consider too.

Im always hesitant to tell clients to balance transfer their student loans due to unforeseen benefits. Id leave it alone unless the savings are significant enough to you or a budget issue arises.

Ahh interesting. I will definitely look into that tax deduction.

I was definitely a bit hesitant to transfer her loans, but I just hate debt. Which I just need to get over.

She actually works in a low-income school district so there is a forgiveness/repayment option you can qualify for up to like $17,500 in forgiveness after 5 years in a low-income district. However, by that time we'll have them mostly paid off...unless deferment continues to drag on.

SergeantGander posted...

Payed it down to $10k and have been waiting in case there is legislation for forgive $10k

bruuuuuuuuuuh

also the concept of taking out a loan for something not overtly "required" rubs me the wrong way. especially with what isn't that much in savings in the big picture. if one of you loses your jobs as we head into a recession, you're hosed

i personally dont think the money's there to justify this. MAYBE the patio.. but i'd consider building a simple fire pit and getting a few nice chairs, and pour down something to make a solid surface for a grill station. keep it simple. the full kitchen overhaul seems too high atm, especially still with 5 figures of student loan debt.

I didn't mention this, but she actually just got a job December. Prior to that she was working like 10-15 hours a week waiting tables. Our mortgage is only $700/month.

We basically lived off my salary and we're still paying her loans + putting money into retirement before she got a job. We've put away like $20k since she started working. I've just been watching savings build up and up and started thinking with all the inflation talk if it was wasteful to let it sit idly.

I'm with you though, I never loved the idea of taking out loans but that is why I'm here asking for advice from different people with different perspectives!

SergeantGander posted...

Duh. I just don't really use reddit. Hope there isn't a karma(?) requirement for that board.

Ahh interesting. I will definitely look into that tax deduction.

I was definitely a bit hesitant to transfer her loans, but I just hate debt. Which I just need to get over.

She actually works in a low-income school district so there is a forgiveness/repayment option you can qualify for up to like $17,500 in forgiveness after 5 years in a low-income district. However, by that time we'll have them mostly paid off...unless deferment continues to drag on.

Its a deduction only if you itemize. Youre probably taking the standard deduction.

^Yupp. You're right