Carmen Wong Ulrich is a personal finance expert and author of "The Real Cost of Living" and "Generation Debt." She joined us for a live Web chat Wednesday morning after the show's Money 911 segment.
Here are two of her answers and a complete archive.
Question from Richard Padgett: I have an IRA of $61,500, my mortgage is $53,000. I am 60 years old and looking to retire in three years. Should I pull this money from the IRA and pay off the mortgage. I also have a large 401K.
Carmen Wong Ulrich: Richard - If you're looking to retire at or before 65, I hope you have a BIG 401k because you'll need it! ;-) Prepaying your mortgage isn't the best long-term scenario if you're looking for not only security, but return. Reducing monthly expenses is one thing, but your home doesn't let your money grow tax-free, something your IRA does. Plus, studies show that a well-diversified portfolio performs better over time than home value/housing market. Good luck!
Question from June: My daughter is buying a car and doesn't like loans. She is spending about $10,000, but also won't like spending all her money in a big chunk. Should she put $5,000 down and finance the rest but then pay it with the rest of her money?
Carmen Wong Ulrich: June - Auto loan rates today, if you have great credit, are very cheap. My sister just got a $7,000 loan (on a $12,000 car) at 5 percent. Your daughter can consider the same. At 5 percent, especially if she's buying used and not getting slammed with too much depreciation, the math of putting some down then borrowing the other half is sound. Plus, I'd rather she keep cash on hand too in case of an emergency!
Complete archive:
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