Podcast Episode 272: Mailbag – Renovation Expenses, Life Insurance, College Savings & More

It’s time once again to open up the mailbag and get to as many of your questions as we can on this week’s episode of the podcast. We will touch on some great topics today like paying for home renovations, life insurance policies, and college funding options.

The first question on the show today comes in from a couple that’s considering a remodel for their kitchen but wondering whether it’s worth the investment. In many cases, the cost of a renovation isn’t reflected in the value of the home when it comes time to sell so you need to consider your time horizon.

Are you planning to move soon or will you be living in this home for a long time? If it’s the former, it’s probably not worth liquidating investments to pay for the upgrades. But it’s okay to pay for things that you’ll enjoy and will improve your everyday life even if it you don’t get a full return on your money.

The second question we’ll answer today is about the best way to start saving for a grandchild’s college fund and what risks come with setting the money aside. We’ve always been a big fan of starting this college saving early and we like the idea of contributing over a period of time for dollar cost averaging purposes.

For those that are worried that money might be lost if the grandchild doesn’t go to college, the 529 plan provides a little flexibility. You can transfer the account to another grandchild or family member that will use that money on education. And if you end up having to pull the money out, you’ll pay a penalty and owe some taxes but you should be able to get most of it back.

The next topic we’re tackling is life insurance. The question we received asked about a 20-year-old life insurance policy and whether it would be a good idea to take the cash value and buy a new policy with better rates today. There are a few questions we’d ask in response to determine whether this is something that’s worth considering. Ultimately, you want to determine the purpose of the life insurance policy and once you do that, there are some good options available.

The final thing we discuss on the show today involves cash. It’s a question we get a lot but this person is wondering what they should do with their extra savings. He doesn’t want to leave it in the bank but is also worried about a possible recession. First off, this is a loaded question and one that we’d need to drill down on a lot more with the individual.

It starts with a conversation to determine which road you need to go down. Like all these other planning items, it’s crucial to sit down and evaluate your overall portfolio and talk about where you want to go. No one arrives at retirement by accident. It takes a lifetime of good decisions and often doing without.

If you want to have a conversation, take advantage of our Money Map review to get the process started.

0:22 – Mailbag question on paying for remodeling expenses

2:32 – Mailbag question on college funds for grandchildren.

4:28 – Mailbag question on life insurance  

6:12 – Mailbag question on prospectus fine print

8:05 – Mailbag question on investing extra cash