“I’m coming into an inheritance after my divorce. How should I use that money?” (Listener Intervention)

Podcast Summary

• Monetizing spare resources with Airbnb: Airbnb can be an easy and profitable side hustle with minimal startup costs. Consider renting out a spare room to offset costs or generate income.

  Monetizing what you already have, such as renting out a spare room on Airbnb, can be an easy and effective side hustle. The speaker, a podcast host and author, shared her experience of using Airbnb to offset the costs of leaving her home empty while she writes in remote cabins. She emphasized that this opportunity requires minimal startup costs and is a great option for those new to side hustles. Additionally, the episode discussed the financial decision of a friend, Chris, who was considering using an inheritance to buy a house in cash. The experts advised against this, suggesting that keeping the money liquid and investing it could yield greater returns in the long run. Overall, the conversation highlighted the importance of careful financial planning and utilizing available resources.

• Anticipating an Inheritance: Planning for the Future: When expecting an inheritance, consider taxes, consult a financial advisor, and plan for future expenses while maintaining an emergency fund and debt management.

  Understanding the full financial picture of an anticipated inheritance is crucial for planning future financial moves. The speaker is expecting to receive approximately 338,000 USD from an inheritance, but they are unsure of the exact amount and timing due to ongoing legal proceedings. They plan to use the money to buy a house in Beavercreek, Ohio, where their children attend school. It is essential to consider potential taxes, such as inheritance tax, and to consult with a financial advisor for accurate information. The speaker is debt-free except for a car payment and does not currently have a mortgage. They plan to stay in Ohio for at least the next 11 years due to their children's schooling and have an emergency fund that can last for four months.

• Considering Investing Over Homeownership: While having a home is important, investing your money could potentially yield greater financial gains. Individual circumstances and financial goals should be considered before prioritizing homeownership over investing.

  While having a place to call your own and achieving financial security are important, it's crucial to consider the potential benefits of investing your money instead of putting it all into a house. The interviewee shared that they have a decent savings base, including a 401k and various investments, but they were considering using their inheritance to buy a house outright. While having a home and a sense of community are valuable, the interviewee acknowledged that the emotional ties to homeownership should not overshadow the potential financial gains from investing. The interviewee's financial situation, including their current investments and savings, suggests that they could afford to invest more and potentially grow their wealth further. The idea of diversifying one's portfolio, as encouraged by Chris Rock in a comedy special, also resonated with the interviewee. Ultimately, the decision to prioritize homeownership over investing depends on individual circumstances and financial goals.

• Considering Emotions and Personal Circumstances When Buying a House: When buying a house, consider both financial and emotional factors, understanding that personal circumstances and feelings of security and rootedness matter, but also recognize that economic factors like inflation can impact the investment's value.

  While a house may be seen as a good investment, it's important to consider emotional factors and personal circumstances before making a purchase. The speaker shares a personal experience of foreclosure and emphasizes the importance of feeling secure and rooted in a place. However, they also acknowledge that circumstances can change, and if one is not planning to stay in a house long-term, it might not be the best financial decision. The speaker warns against making big purchases, like a house, with the mindset of selling it in the future, as it's not a healthy approach to any relationship or investment. They encourage considering the emotional value of a place and factoring it into the decision-making process. The speaker also challenges the notion that a house is always a good investment, reminding us to consider inflation and other economic factors. In essence, the takeaway is to approach the decision of buying a house with a balanced perspective, considering both financial and emotional factors.

• Housing may not be the best investment: Despite common beliefs, housing, when adjusted for inflation, doesn't keep up with the stock market's growth. Owning a home comes with unexpected expenses and responsibilities, potentially making stock market investment a better option.

  Housing may not be the best investment across the board, despite common beliefs. While it's true that some people have made significant profits from real estate, the largest study conducted by the Case Shiller index shows that housing, when adjusted for inflation, does not keep up with the growth of the stock market. Additionally, owning a home comes with unexpected expenses and responsibilities, such as repairs and maintenance, which can be costly and time-consuming. It's essential to consider all factors before making a decision about whether or not buying a house is the best financial move for you. Instead, investing in the stock market could potentially yield better returns over time. Ultimately, the choice depends on individual circumstances and priorities.

• Investing in the stock market is a better financial decision than keeping money in low-interest savings or checking accounts.: Investing in the stock market historically has a higher return than savings or checking accounts, even after adjusting for inflation. Consider buying a house and investing the extra money for better financial growth.

  From a financial perspective, keeping your money in a savings or checking account with low interest rates won't help you grow your wealth, especially when accounting for inflation. Instead, investing in the stock market, which historically has an average return of around 10%, adjusted for inflation, is a better option. Additionally, considering the low mortgage rates, buying a house and using some of the money to invest in the market could be a wise decision. It's essential to reconsider the notion that housing is a good investment for financial growth. If you know someone who needs financial guidance, encourage them to reach out to Money Rehab at moneyrehab@nicoleappen.com. Remember, friends don't let friends make poor financial decisions. As your new financial bestie, I'm here to help you make informed choices and take control of your finances. Money Rehab is produced by iHeartRadio, and I'm your host, Nicole Lapin. Our team includes Morgan LaVoy and Mike Coscarelli as producers, and Nikki Itor and Will Pearson as executive producers. Our mascots are Penny and Mimsy, and a big thank you to Michelle Lance, Katherine Law, and Brandon Dicker for their contributions to the show. And finally, thank you for investing in yourself and joining us on this financial journey.