Credit: Chris Guillebeau
Kristin is floored by the 60 percent increase in her homeowner’s insurance this year. Should she cancel the policy and self-insure instead?
Susana and her husband are torn. They bought their dream home last year but now need to relocate indefinitely. What should they do with the house?
An anonymous caller wants to help his soon-to-be wife invest a five-figure gift she received in another country. How do they untangle the complexities of managing money from abroad?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Kristin asks (at 01:35 minutes): When is it a good idea to self-insure a house? I live in Arizona and our insurance recently increased from $3,000 to $5,000.
I’ve been told that’s normal, but that sounds like an insane number to me. The house is paid off, worth $570,000, and as strong as an underground cement bunker.
Our house resembles a hobbit house: built into a hill and made entirely of concrete. If we don’t think much can happen to this house, why are we spending $5,000 a year to insure it?
Can you help me think through this?
Susana asks (at 21:41 minutes): What should I do with my house while I live out of state for an undetermined amount of time?
Last year, my fiancé and I bought our first home 25 minutes from downtown Austin, Texas with a five percent down payment. We love our house and want to live here for the long term.
However, we’re moving out of state for one to three years without an exact end date. We want to rent our house out, but how do we decide between a long-term and short-term rental?
The house is 25 years old and needs cosmetic renovations in the kitchen and bathrooms. Even after renovations, it likely won’t cash flow as a long-term rental.
It could cash flow as a short-term rental, but it would cost more upfront. The renovations would include higher-end finishes, furniture, and landscaping to compete with other listings.
Most of these renovations include things we’d want to do for ourselves if we didn’t have to move, but we’d do them slowly over time, rather than within less than a year.
Also, a short-term rental would give us the flexibility to move back anytime and allow us to stay in the house when visiting family.
We’re both in our early thirties. We have no debts other than our mortgage and a car loan. I’m a PhD student on a stipend so we haven’t been able to invest as aggressively as we’d want to.
Our household income will double when I finish in three months and start my full-time job. We could use the extra income to pay for upfront costs or take the hit of negative cash flow.
A third option we’re open to is selling the house. However, with the little equity we’ve built up, we wouldn’t profit much from the sale and may even have to pay something out of pocket.
What are your thoughts? How would you go about making this decision?
Anonymous asks (at 47:34 minutes): My girlfriend received a large financial gift of €40,000. She’s young and doesn’t know what to do with the money. How can I help her?
So far, she’s spent €10,000 to buy a new car and plans to use an additional €3,000 to €5,000 to fix it up. The rest of the money is being kept in a savings account in Germany, but I’m afraid it won’t accrue much growth there.
She’s from Germany but we both live in Kenya together. She runs a successful business with her family which allows her to save quite a bit. I’m an entrepreneur with a fitness business that doesn’t bring in much money. 70 percent of it goes to my living expenses.
Should we keep it in Germany and look at the investment options there? Or move it to Kenya and look at the investment options here? Should we invest in bonds, ETFs, or real estate?
I realize my question is vague, but I’d like to hear what you’d do with a large financial gift like that. We plan to get married next year and want to have two kids within five years.
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